News
In the past two years, the semiconductor industry has experienced a market downturn, a recovery slower than expected, and a cash crunch. Major companies such as Intel, TSMC, and Samsung, while continuing to advance their expansion projects, have been constantly adjusting and slowing down the pace and schedule of their fab construction to better serve their long-term development goals. It’s found that seven fabs worldwide are projected to delay construction.
According to a report from global media outlet Volksstimme, the construction of Intel’s Fab 29.1 and Fab 29.2 near Magdeburg, Germany, has been postponed due to pending approval of EU subsidies and the need to remove and reuse black soil. The date of commencement has been pushed from summer 2024 to May 2025.
Earlier reports indicated that the construction of this chip planr was initially expected to begin in 1H23, but due to subsidy delays, construction was put off to summer 2024. Moreover, the topsoil at the construction site cannot be cleared until May 2025 at the earliest.
It is reported that Intel’s Fab 29.1 and Fab 29.2 were originally scheduled to start operations by late 2027 and were expected to employ advanced manufacturing processes, potentially Intel 14A (1.4nm) and Intel 10A (1nm) process nodes. However, Intel now estimates that it will take four to five years to build these two plants, and production is expected to commence between 2029 and 2030.
In February 2024, Samsung revealed that it had partially halted the construction of its fifth semiconductor plant in Pyeongtaek, Gyeonggi Province. Samsung originally planned to build six semiconductor plants on an 855,000 square meter site in Pyeongtaek, creating the world’s largest semiconductor hub. Currently, the P1, P2, and P3 plants at the Pyeongtaek park house the most advanced DRAM, NAND flash memory, and foundry production lines, while the P4 and P5 plants are under construction.
Samsung stated that the halt was for further inspection. However, industry sources have revealed that Samsung’s adjustment of the new production lines for P4 and P5 fabs is to prioritize the construction of the PH2 production line at P4 fab. It is reported that P4 plant might build PH3 production line to produce high-end DRAM to meet market demands.
Besides, South Korean media Businesskorea also revealed Samsung has postponed the mass production timeline of the fab in Taylor, Texas, US from late 2024 to 2026, which is possibly due to a slowdown in the wafer foundry market growth, and the delay was attributed to U.S. government subsidies and issues related to the complexities in gaining permits.
On April 9, TSMC announced the plan to build a third fab in Arizona. Once completed, this fab will use 2nm process or even more advanced technologies to manufacture wafers for customers. With this addition, TSMC’s total capital expenditure in Phoenix, Arizona, will exceed USD 65 billion.
Meanwhile, TSMC disclosed that their first fab in Arizona will start production in 1H25, using 4nm process. The second fab, initially announced to use 3nm process, will also incorporate the more advanced 2nm process, with mass production set to begin in 2028. This fab was announced in December 2020, which was originally scheduled to start mass production using 3nm process in 2026, primarily, but the latest schedule represents a delay of nearly two years from the original one.
As to the third fab planned to set up in Arizona, TSMC has not yet disclosed the date for construction. However, they mentioned that it will use 2nm process or more advanced ones, with production expected to commence in the late 2030s.
Wolfspeed’s 8-inch SiC fab in Ensdorf, Saarland planned to invest about EUR 2.75 billion, but the construction has been postponed. The project has already secured subsidies of EUR 360 million from the German federal government and EUR155 million from the Saarland government. In addition, Wolfspeed is also seeking financial assistance from the European Chips Act. ZF will provide Wolfspeed with several hundred million dollars of financial investment in exchange for a minority stake in the plant.
Industry sources indicate that Wolfspeed aims to secure more funding before the groundbreaking ceremony. If it fails to gain financial assistance from the European Chips Act, the project is very likely to be delayed. The plant was initially scheduled to start construction in summer 2024, but Wolfspeed CEO Gregg Lowe revealed that it might now begin in 2025.
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(Photo credit: TSMC)
News
SiC industry giant Wolfspeed issued a press release on December 4th, formally selling its radio frequency business (Wolfspeed RF).
Back to August 22nd of this year, Wolfspeed had announced the sale of Wolfspeed RF to the U.S. semiconductor company MACOM Technology Solutions Holdings, Inc.
Under the transaction terms, Wolfspeed received approximately USD 75 million in cash, subject to a customary purchase price adjustment, and 711,528 shares of MACOM common stock, which shares had a market value of approximately USD 60.8 million based on the closing price for MACOM’s common stock on December 1st, 2023 as reported on the Nasdaq Global Select Market.
MACOM specializes in designing and producing high-performance semiconductor products. Their product range spans radio frequency, microwave, analog and mixed-signal, and optical semiconductor technologies, catering to industries such as telecommunications, industrial applications, defense, and data centers. Headquartered in Lowell, Massachusetts, USA, MACOM’s business footprint extends across the United States, Europe, Asia, and beyond. With the successful completion of this business acquisition, the company’s impact in the radio frequency domain is poised to experience notable reinforcement.
President of CEO of Wolfspeed Gregg Lowe said, “The completed sale of Wolfspeed RF is the final step in our transformation, and we’re happy to say Wolfspeed is now the only pure-play silicon carbide semiconductor manufacturer in the industry. As demand continues to accelerate across the automotive, industrial and renewable energy markets, we can now focus on innovation and capacity for our materials and power device businesses.”
TrendForce reveals a future landscape for the SiC power device market, projected to reach USD 5.33 billion by 2026, driven by robust demand in downstream applications, particularly in electric vehicles and renewable energy. Despite this positive outlook, the SiC industry faces constraints due to supply issues in SiC substrates.
Wolfspeed’s recent decision to divest its radio frequency business further underscores the company’s commitment to maintaining a leading role in the SiC substrate market, where it currently stands as the sole producer capable of mass-producing 8-inch SiC substrates.
Current situation of the SiC substrate industry
Considering the SiC substrate industry dominated by few players, Wolfspeed stands out as a notable example. More and more companies are opting to enhance their production capacity for high-quality SiC substrates used in automotive main inverters.
The SiC substrate industry is actively addressing challenges of low demands and high cost, making various companies to expand from 6-inch to 8-inch SiC substrates. While Wolfspeed is ahead in the production of 8-inch SiC substrates, other industry leaders are also making notable progress:
Moreover, several Chinese companies, including SEMISiC, Jingsheng, Summit Crystal, Synlight, KY Semiconductor, and IV-SemiteC, are actively advancing the development of 8-inch SiC substrates, contributing to the overall progress in the SiC substrate industry.
Wolfspeed’s Optimism Amid Industry Upgrades
In the face of industry upgrades and competitive pressures, Wolfspeed’s leadership remains optimistic. Looking into its result in second quarter of fiscal 2024, Wolfspeed targets revenue from continuing operations in a range of USD 192 million to USD 222 million. GAAP net loss from continuing operations is targeted at USD 131 million to USD 153 million. Non-GAAP net loss from continuing operations is targeted to be in a range of USD 71 million to USD 88 million. Based on the result, Wolfspeed aim to meet 20% utilization goal at the Mohawk Valley Fab in next quarter. The company predicts the revenue of the fab will rise from USD 4 million to USD 10~15 million. The third quarter revenue will grow significantly as well.
Being the only front runner in the global market solely dedicated to SiC business, Wolfspeed can channel all its focus and resources into SiC materials and power device operations. As Wolfspeed enhances the capacity of its fabs, there is potential for a further increase in its market share for SiC materials and power devices. In response to this evolving landscape, other companies are likely to expedite the research and production of 8-inch SiC substrates, aiming to enhance their market presence and actively contribute to the overall advancement of the SiC industry chain.
(Image: Wolfspeed, MACOM)
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Insights
Last week, major power semiconductor manufacturer Infineon announced plans to invest up to 5 billion euros over the next five years to construct the world’s largest 8-inch SiC power wafer factory in Kulim, Malaysia. This expansion will raise the total investment in the Kulim plant from 2 billion euros to 7 billion euros.
Interestingly, in February of this year, Wolfspeed announced its own plans to build what is touted as the world’s largest 8-inch SiC factory in the Saarland region of Germany. Infineon’s significant investment in the Malaysian 8-inch SiC factory sets the stage for potential competition with Wolfspeed, sparking an impending battle for Silicon Carbide production capacity.
In fact, driven by the rapid growth of industries like electric vehicles, the space for SiC power devices is expanding, attracting both Chinese companies and international enterprises to ramp up production.
According to statistics from TrendForce, aside from Wolfspeed, the first half of this year saw numerous companies, including STMicroelectronics, Mitsubishi Electric, Rohm, Soitec, and ON Semiconductor, expanding their production capacities. STMicroelectronics, for instance, announced a $4 billion investment in January to expand 12-inch wafer production. In June, they partnered with San’an Optoelectronics to establish a joint venture for 8-inch SiC device manufacturing, with an estimated total investment of around $3.2 billion.
On the Chinese front, there have been seven expansion projects related to Silicon Carbide. CRRC is investing 11.12 billion yuan to establish a project for the industrialization of medium and low-voltage power devices. YASC is also planning to construct a Compound Semiconductor power device production project, encompassing epitaxial growth, wafer manufacturing, packaging, and testing lines. Upon completion, the facility will have an annual production capacity of 360,000 6-inch SiC wafers and 61 million power device modules.
Additionally, BYD plans to invest 200 million yuan to establish a SiC epitaxial trial production and mass production project at its automotive production base in Shenzhen. The expansion will add 6,000 SiC epitaxial wafers per year, bringing the total capacity to 18,000 wafers per year.
(Photo credit: Tesla)
In-Depth Analyses
The global automotive industry is pouring billions of dollars into SiC semiconductors, hoping that they could be key to transforming vehicle power systems. This shift is rapidly changing the supply chain at all levels, from components to modules.
In the previous piece “SiC vs. Silicon Debate: Will the Winner Take All?,” we explored SiC’s unique physical properties. Its ability to facilitate high-frequency fast charging, increase range, and reduce vehicle weight has made it increasingly popular in the market of electric vehicles (EVs).
Research from TrendForce shows that the main inverter has become the first area for a substantial penetration of SiC modules. In 2022, nearly 90% of all SiC usage in conventional vehicles was in main inverters. As demand grows for longer range and quicker charging times, we’re seeing a shift in vehicle voltage platforms from 400V to 800V. This evolution makes SiC a strategic focus for automotive OEMs, likely making it a standard component in main inverters in the future.
However, it is common for now that SiC power component suppliers fail to meet capacity and yield expectations – a challenge that directly affects car production schedules. This has led to a struggle for SiC capacity that is impacting the entire market segment.
Device Level: Burgeoning Strategic Alliances
Given the long-term scarcity of SiC components, leading OEMs and Tier 1 companies are vying to forge strategic partnerships or joint ventures with key SiC semiconductor suppliers, aiming to secure a steady supply of SiC.
In terms of technology, Planar SiC MOSFETs currently offer more mature reliability guarantees. However, the future appears to lie in Trench technology due to its cost and performance advantages.
Infineon and ROHM are leaders in this technology, while Planar manufacturers like STM, Wolfspeed, and On Semi are gradually transitioning to this new structure in their next-generation products. The pace at which customers embrace this new technology is a trend to watch closely.
Module Level: Highly-customized Solutions
When it comes to key main inverter component modules, more automakers prefer to define their own SiC modules – they prefer semiconductor suppliers to provide only the bare die, allowing chips from various suppliers to be compatible with their custom packaging modules for supply stability.
For instance, Tesla’s TPAK SiC MOSFET module as a model case for achieving high design flexibility. The module employs multi-tube parallelism, allowing different numbers of TPAKs to be paralleled in the same package based on the power level in the EV drive system. The bare dies for each TPAK can be purchased from different suppliers and allow cross-material platform use (Si IGBT, SiC MOSFET, GaN HEMT), establishing a diversified supply ecosystem.
China’s Deep Dive into SiC Module Design
In the vibrant Chinese market, automakers are accelerating the investment in SiC power modules, and are collaborating with domestic packaging factories and international IDMs to build technical barriers.
Clearly, the rising demand for SiC is redrawing the map of the value chain. We anticipate an increase in automakers and Tier 1 companies creating their unique SiC power modules tailored for 800-900V high-voltage platforms. This push will likely catalyze an influx of innovative product solutions by 2025, thereby unlocking significant market potential and ushering in a comprehensive era of EVs.
In-Depth Analyses
Onsemi, a semiconductor manufacturer, announced at the end of April that it had signed a Long-Term Supply Agreement for SiC power components with Zeekr, a subsidiary of Geely Auto Group. Geely Automotive will use Onsemi’s EliteSiC power components to optimize energy conversion efficiency in its electric drive system. This move signals Onsemi’s aggressive expansion in the automotive SiC market, catching up to leading manufacturers STMicroelectronics and Infineon.
In the SiC semiconductor market for electric vehicles, STMicroelectronics and Infineon have maintained their market leadership by entering the market early, while Wolfspeed and ROHM have gained traction through their vertical integration technology for SiC. On the other hand, Onsemi still lags behind in terms of market share for SiC power semiconductors, even though it acquired GT Advanced Technologies in 2021 and mastered the most difficult wafer growth and production equipment technology in SiC manufacturing. Before 2023, Onsemi was only used in small and medium-sized vehicle models such as NIO and Lucid.
However, Onsemi’s benefits begin to materialize in 2023, thanks to the industry maturity built by early players such as Infineon and STM, combined with Onsemi’s early deployment of SiC-related technology. Onsemi’s SiC product EliteSiC has obtained LTSA from Zeekr, BMW, Hyundai and Volkswagen in the form of discrete and modules. Its CEO, Hassane El-Khoury, has stated that the SiC business will generate $4 billion in revenue over the next three years compared to the total revenue for the 2022 SiC market of approximately $1.1 billion. These factors have made Onsemi the most talked-about semiconductor company in the SiC market this year.
However, the intense competition in the SiC market will test the endurance of resource input sustainability. The rapid growth in SiC demand over the past five years is mainly due to high battery costs and the development of energy density having reached its limit. Car manufacturers have switched to using SiC chips in their electronic components to increase driving range without increasing the number of batteries.
As a result, car manufacturers are aggressively pushing semiconductor companies to accelerate their research and development of SiC technology. This has resulted in a significant reduction in R&D time, but also an increase in R&D costs. Coupled with the impact of intense market competition on profits, the ability to sustain R&D resource input and overall profitability performance will be the key indicators of semiconductor companies’ competitiveness.
Onsemi has successfully improved its profitability performance by streamlining its product lines over the past few years, ranking at the top with a 49% gross margin, according to the financial reports of various semiconductor companies in 2022. This profitability performance allows Onsemi to meet car manufacturers’ cost requirements and secure orders, thereby achieving economies of scale in SiC product growth.
However, in terms of R&D costs as a percentage of revenue, Onsemi ranks last at 7%, compared to its main competitors Wolfspeed (26%), Infineon (13%), STM (12%), and ROHM (8%). With semiconductor companies investing more in technologies such as reducing on-resistance and improving yield rates, how to maintain a balance between profitability performance and resource expenditure while achieving revenue goals through intense market competition will be an important challenge for Onsemi after securing orders from car manufacturers.
(Source: Zeekr)