SiC: The darling of the semiconductor material market
Whether it's ZF and Wolfspeed planning to establish a SiC technology research center in the Nuremberg region, or Infineon signing supply agreements with two Chinese SiC silicon carbide wafer and SiC substrate manufacturers, manufacturers' enthusiasm for this new semiconductor material has not diminished.
According to Yole's prediction, SiC power devices will soon occupy 30% of the entire power device market, and by 2027, the output value of the SiC industry (from substrates to modules, including devices) is expected to exceed $6 billion.
Major semiconductor manufacturers are attempting to enter this market from different perspectives, but the market performance over the past few years has proven that only by fully mastering the supply chain can high value-added be obtained. Therefore, the IDM model is becoming the most important trend in industrial development.
IDM mode stands out alone
The SiC production capacity of STMicroelectronics, which has exceeded 100 million in vehicle grade SiC shipments, increased by more than 2.5 times in 2022 compared to 2020, thanks to its steadfast vertical integration strategy. Moreover, STMicroelectronics hopes to achieve an internal supply target of over 40% SiC substrates by 2024.
STMicroelectronics has developed a very detailed plan around this strategy, which is divided into four steps: firstly, the acquisition of Northel AB (now renamed ST SiC AB) will be completed in the fourth quarter of 2019; Secondly, the first internal supply of 6-inch substrates in the first quarter of 2020; Thirdly, the first batch of 8-inch wafer samples will be launched in the third quarter of 2021, and mass production is expected before 2024; Fourthly, plan to build a new factory with the goal of achieving an internal procurement ratio of over 40% by 2024.
Cao Zhiping, Executive Vice President of STMicroelectronics and President of China, believes that for new technologies like SiC, it is important to control the entire manufacturing chain as much as possible, including SiC substrates, pre process wafer manufacturing, post process sealing testing, and customized SiC power modules.
Unlike logic chip manufacturers, the power semiconductor industry has always been dominated by IDM. The IDM model enables collaborative optimization of the design and manufacturing processes, shortens product development time, and facilitates the accumulation of manufacturing experience, forming technological advantages.
Taking SiC manufacturing as an example, if IDM manufacturers face problems at the component end, they can follow the path to identify errors in the upstream substrate or epitaxial link, accelerate the improvement of process quality, and effectively control overall costs; If a manufacturer only produces SiC substrates or epitaxial crystals, customers need to be willing to provide feedback to fill the information gap in wafer manufacturing in order to accelerate the development of the material end.
The IDM mode can also ensure the stability of product quality and supply capacity. At the same time, the core processes in the manufacturing process are directly related to the performance of the product and are also the company's core secrets. Adopting the IDM mode can also ensure the safety of the core processes.
STMicroelectronics integrates substrates into the manufacturing chain not only to control costs and output, but also to achieve better yield, allowing manufacturing business to have greater flexibility and better follow market demand.
The acquisition of substrate and epitaxial wafer manufacturer Northel AB is the key for STMicroelectronics to enter the upstream of the SiC supply chain, truly possessing a complete SiC manufacturing chain.
Other manufacturers that rank high in the SiC market also follow similar paths to supplement their manufacturing capabilities. For example, Ansemy acquired substrate manufacturer GT Advanced Technologies for $415 million in 2021, which launched CrystX SiC materials in 2019 and subsequently entered into long-term supply agreements with Global Crystal, Ansemy, and Infineon. Rom, who has been conducting research in the SiC field for a long time, also acquired SiC substrate supplier SiCrystal in 2009, making it one of the top three suppliers of SiC substrates globally.
Having substrate manufacturing capabilities will be a key step towards the IDM mode, as SiC substrates have the highest cost share in the final device and are crucial for product quality. According to statistics, the proportion of SiC substrates in the average cost of SiC devices is 46%.
Moreover, SiC substrates are also the highest technological barrier in the entire industry chain. The production of SiC substrates requires a highly specialized and technically complex production process that involves multiple steps, including material preparation, substrate cutting, and polishing.
The entire production process needs to strictly control the parameters and processes of each link to ensure the stability and consistency of substrate quality. At the same time, the technical difficulty and cost of substrate production are also high, which makes substrate production have a considerable added value in the entire SiC value chain. Mastering substrate manufacturing capabilities gives one greater say in the industry.
Other industries often have higher downstream profits, but SiC substrates are a part of the entire industry chain with higher technological barriers. Even if yield increases in the future, excess profits are mostly earned by substrate manufacturers. In addition, substrates are crucial for the safety of the entire supply chain, which is why major manufacturers are betting here.
Accelerate steering with 8-inch SiC substrate
From the perspective of SiC substrate production alone, it has become an important support for the rapid growth of the SiC device market, and the current market demand for 4-inch and 6-inch SiC substrates cannot be met.
Therefore, it is necessary to increase the size of SiC substrates. Especially for some high-power, high-voltage, and high-frequency applications, larger SiC substrates are required to manufacture corresponding devices, which also puts forward higher requirements for improving the size of SiC substrates.
At the same time, in order to further reduce the cost of SiC power components, increasing the number of components on a single wafer is one of the main ways, so the industry is fully promoting the 8-inch transformation.
In September 2022, shortly after the opening of Wolfspeed's new factory, it was announced that it would invest approximately $1.3 billion to build the world's largest SiC substrate factory in North Carolina. The new factory is planned to be built in Chatham County, adjacent to the already built Durham SiC substrate factory at Wolfspeed. The completion of Chatham's new factory will increase its SiC production capacity by more than 10 times, mainly producing 8-inch silicon carbide substrates for supply to Wolfspeed's Mohawk Valley factory in New York.
Wolfspeed is currently the only company in the world that can mass produce 8-inch SiC wafers. This dominant position will continue for the next two to three years until more companies' production capacity is in place.
STMicroelectronics is already undergoing an 8-inch upgrade, and AB factory has launched the first batch of internal 8-inch prototype wafers. In December 2022, it also announced that it would collaborate with Soitec to develop SiC substrate manufacturing technology, and both parties agreed to introduce Soitec's SmartSiC technology in the future 8-inch SiC substrate manufacturing process.
Coherent (formerly known as II-VI) announced in March 2022 that it will build a nearly 300000 square foot factory in Easton, USA, to expand the production of 6-inch and 8-inch SiC substrates and epitaxial wafers. In addition, Rom and Infineon also plan to start mass production of 8-inch SiC substrates around 2023.
Poshun Chiu, a senior technology and market analyst at Yole Intelligence, a subsidiary of the Yole Group, specializing in compound semiconductors and emerging substrates, said, "As large-sized substrates are a strategic resource for next-generation device manufacturing, the opening of an 8-inch wafer factory and the expansion of material production capacity illustrate ambitious goals for the next decade
To make SiC fully enter 8 inches, not only the increase in substrate size, but also subsequent processes, such as epitaxial processes, need to be followed up.
Due to the fact that all SiC devices are implemented on epitaxy, and the quality of epitaxy is also affected by crystal and substrate processing, the SiC epitaxial process plays a crucial role in the overall development of the industrial chain. Fortunately, equipment manufacturers are ready, and mainstream manufacturers such as Aisiqiang and Epiluvac have announced the launch of 8-inch epitaxial furnaces. Showa Electric, the world's largest supplier of SiC epitaxial wafers, also achieved the shipment of 8-inch epitaxial wafers in 2022.
At present, the key constraint for the industry to fully shift to 8-inch is still the issue of yield, as 8-inch SiC wafers have problems such as difficult material growth, cutting, and high cutting losses. Many industry insiders believe that it will be difficult to replace 6-inch wafers within at least three years.
However, with breakthroughs in material growth and process yield issues, it is only a matter of time before chips on 8-inch substrates will become mainstream.