The landscape of the silicon carbide (SiC) substrate industry in China has significantly transformed in 2023, witnessing an unprecedented influx of new players and substantial expansion across various regionsThis surge in activity marks a crucial juncture in the industry, as the country's production capabilities have reached remarkable scales that were previously inconceivable.

Industry statistics reveal that by 2023, the sales volume of SiC substrates in China, converted to 6-inch units, has surpassed one million piecesMany manufacturers' production ramp-up rates have outstripped expectations, and even today, initiatives aimed at increasing the capacity for 6-inch SiC substrates continue unabated.

The expansion of SiC production capacity remains a dominant trend.

Current estimates suggest that there are over 20 companies in mainland China dedicated to the production of SiC substrates

Prominent names in the field include Tianyue Advanced, Tianke Heda, Dongni Electronics, ShuoKe Crystal, Tongguang Crystal, Century Jinguang, and Luxiao Technology.

Tianyue Advanced has made significant strides, with its new plant in the Shanghai Lingang area starting to deliver6-inch conductive SiC substrates as of May 2023. The company is currently experiencing ongoing capacity and output increases, projecting that it will achieve full production ahead of scheduleIn the latter half of 2023, Tianyue Advanced decided to expand its annual production capacity of 6-inch SiC substrates to 960,000 piecesOnce it reaches full production, the Shanghai Lingang facility will become the main production hub for conductive SiC substrates.

Tianke Heda's second-phase SiC chip project in Xuzhou began construction in August of last year, with a total investment of 830 million yuan

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Upon reaching full production, the facility is expected to yield 160,000 SiC substrates annuallyAs of December 28, 2023, the project has completed all construction phases and is projected to begin operations this yearFurthermore, starting from February 27, 2024, a production base for third-generation semiconductor SiC materials managed by Tianke Heda's subsidiary Shenzhen Zhongtou Tianke has commenced operations in the Baoan District of Shenzhen, with anticipated annual substrate and epitaxy capacities reaching 250,000 units.

ShuoKe Crystal successfully passed the construction acceptance of its second-phase SiC project this year, adding an expected capacity of 200,000 6-8 inch SiC substrates annually, which will include 200,000 pieces of N-type SiC single crystal substrates, 25,000 pieces of high-purity substrates, and 1.3 tons of Moissanite each year.

Dongni Electronics has completed its “annual production of 120,000 pieces of SiC semiconductor materials” project in the first half of 2023. In March, the Ecological Environment Bureau of Huzhou released the environmental assessment approval comments for Dongni Electronics’ expanded SiC project

The announced expansion plan will utilize the Dongni fifth-phase facility, aiming to achieve an annual production of 200,000 6-inch SiC substrate materials.

San'an Optoelectronics, in a recent investor inquiry session, stated that its SiC production capacity is being gradually released, with expectations to expand its 6-inch SiC capacity to between 18,000 to 20,000 pieces per month by the end of 2023 and early 2024.

Zhongtou Tianke inaugurated its third-generation semiconductor materials industrial park at the beginning of this year, focusing on the production of substrates and epitaxies that are essential for chip manufacturing, emphasizing the establishment of 6-inch SiC single crystal substrate and epitaxy production lines

Its expected substrate and epitaxy capacity for 2024 is estimated at 250,000 units.

Simultaneously, SiC prices continue to decline.

As the global production capacity for 6-inch SiC wafers increases and demand for electric vehicles temporarily slows, this has created downward pressure on SiC prices this year.

Reports indicate that by mid-2024, the price of 6-inch SiC substrates has fallen below $500, approaching the production cost line for Chinese manufacturersHowever, by the fourth quarter, prices are expected to decline further to $450 or even $400, which would impose substantial financial pressure on most manufacturers

Notably, international suppliers were still quoting prices as high as $850 by the end of 2023, leading some tier-one suppliers to seek to sell their businesses to avoid exacerbating their massive losses.

Industry analysts attribute this price drop to an oversupply in the market and increasing competitionThe price war instigated by leading Chinese suppliers to capture market share has intensified, with smaller manufacturers joining the fray, destabilizing the marketWhile Chinese SiC substrate production capacity is rapidly growing, significant variations in yield between different suppliers pose serious challenges in fulfilling ordersThis fierce competition has continued to drive down prices, forcing many manufacturers to sell at a loss.

This highly competitive environment has bolstered the negotiating power of global buyers, with major international IDMs like Bosch and Infineon securing increasingly favorable pricing agreements.

Furthermore, the primary application areas of SiC substrates—electric vehicles and photovoltaic energy sectors—pose challenges for customers, who often face long validation periods of six months to a year when selecting suppliers

This leads to concerns that a supplier might go bankrupt before the verification process concludesThis situation further hinders the liquidity of the supply chain.

Insiders predict that the consolidation wave in the SiC substrate industry, originally anticipated around 2026, could be accelerated to mid-2025 due to the intensification of price wars.

During a recent performance meeting, an investor queried Tianyue Advanced regarding the future pricing of traditional SiC substrates such as 4-inch and 6-inch products.

Zong Yanmin, the chairman and general manager of Tianyue Advanced, elaborated that SiC substrate prices will drop partly due to technology improvements and the effects of economies of scale driving down production costs

Moreover, the current prices of SiC substrates remain higher than silicon substratesThus, decreasing prices can facilitate the expansion of downstream applications and enable broader penetration of SiC technologies.

The rapid expansion of production and significant price cuts by Chinese suppliers have also caught international competitors off guard, subtly altering the global market dynamics.

Meanwhile, leading SiC manufacturers are not exempt from these challenges.

Industry giants are facing significant challenges.

Recently, the Durham-based company Wolfspeed has been grappling with multiple unfavorable developments.

Wolfspeed, which was the first in the world to establish an 8-inch (200mm) SiC wafer fabrication facility, took seven years from project initiation in 2015 until the commencement of production in 2022. In 2023, to expedite its transformation, Wolfspeed sold its RF business to MACOM and subsequently focused on its SiC operations.

However, as competition in the SiC market intensifies, Wolfspeed has faced ongoing losses and is entrenched in a “financial crisis.” According to Wolfspeed's financial report for Q1 of the 2025 fiscal year, revenues shrank by 1.37% year on year to $195 million, while net losses, although narrowed by 28.68%, still amounted to $282 million.

In response to these sustained losses, Wolfspeed has announced a $450 million facility closure and consolidation plan, which entails shutting down its 150 mm SiC plant in Durham, North Carolina, and reducing its workforce by around 20%. The company currently employs 5,000 individuals, meaning approximately 1,000 jobs will be cut

For the second quarter of the 2025 fiscal year, Wolfspeed anticipates a non-GAAP net loss between $145 million and $114 million.

On November 18, Wolfspeed announced that its board had accepted the resignation of Gregg Lowe as president and CEO, as well as board memberWhile both Gregg Lowe and the board refrained from disclosing reasons for his departure, speculation suggests that it relates to Wolfspeed's subpar performance over recent quarters.

Rohm’s SiC business has undergone significant adjustments as well.

Facing its own challenges, another major SiC player, Rohm Semiconductor, is not faring much better.

On November 7, Rohm Semiconductor released its performance report for the first half of the fiscal year 2024 (from April to September 2024). During this period, Rohm Semiconductor reported revenues of 232 billion yen (approximately 10.9 billion yuan), marking a year-on-year decline of 3%. The next day, Rohm held a financial results conference and revealed developments related to its SiC business and future plans.

Initially, there was a planned investment of 510 billion yen (approximately 23.97 billion yuan) for their SiC business from 2021 to 2027, but that figure has been cut to between 470 billion and 480 billion yen (approximately 22.09 billion to 22.56 billion yuan). Specifically, the investment for the fiscal year 2024 has been reduced to 150 billion yen (approximately 7.05 billion yuan), and below 100 billion yen (approximately 4.7 billion yuan) for fiscal year 2025.

Additionally, growth plans have been slowed down; previously, Rohm Semiconductor aimed for its SiC business to reach sales of 110 billion yen (approximately 5.17 billion yuan) in fiscal year 2025. However, due to the slowdown in industrial equipment and electric vehicle markets, this goal has been postponed to 2026-2027.

Lastly, capacity arrangements are being altered; Rohm Semiconductor is pushing for the mass production of 8-inch SiC wafers, with its Chikuho plant set to commence large-scale production in 2025, and the Miyazaki second factory expected to begin operations in 2025. Conversely, the original goal to enhance SiC power semiconductor production capacity to 6.5 times that of fiscal year 2021 by fiscal year 2025 has been delayed by a year.

As the SiC industry enters its next phase...

Currently, the prices for 6-inch SiC wafers are continuously embroiled in an intensifying competitive environment, pushing many vendors to explore pathways for growth by looking towards larger SiC substrates to harness new opportunities and breakthroughs.

The focus has shifted to 8-inch substrates as the battleground of this new phase.

According to Wolfspeed's reports, a naked chip (die) with an area of 32mm² can yield 448 pieces from a 6-inch substrate, whereas 845 pieces can be obtained from an 8-inch substrate, denoting a nearly 90% increase in chip yield from 8-inch substrates in comparison to 6-inch

Due to lower yield rates for edge chips, the 6-inch substrate has an edge die yield percentage of approximately 14%, while the corresponding figure for 8-inch substrates decreases to 7%. The utilization rate of the 8-inch substrate is thus improved by 7% relative to 6-inchTianke Heda calculates that upgrading from 6-inch to 8-inch can potentially lower unit costs by 35%.

As of 2023, an industrial chain encompassing the 8-inch substrate to wafer fabrication has begun to solidify overseasMajor companies abroad are exhibiting noticeably accelerated progress in both developing and researching technologies pertinent to 8-inch SiC substrates over the past two yearsBeyond Wolfspeed, there are seven additional manufacturers of SiC substrates, epitaxies, and devices expected to achieve commercial production of 8-inch substrates in the coming one to two years

Notably, Wolfspeed's 8-inch substrates and MOSFETs have already commenced mass application, while it continues to expand its John Palmour SiC substrate factory to meet the growing demand alongside its 8-inch wafer facility.

STMicroelectronics is similarly investing in the 8-inch arena, collaborating with Hunan San'an Semiconductor to establish an 8-inch SiC wafer factory, with San'an concurrently building an 8-inch SiC substrate plant to ensure a stable supply of materials for the joint facility.

Predictive reports from YOLE forecast that by 2024, 8-inch SiC substrates will enter the market in substantial volumesThe industry anticipates that starting in 2026-2027, the existing 6-inch SiC products will be supplanted by 8-inch variants

Data from Trendforce indicates that the current market share for 8-inch products is below 2%, with projections suggesting that the market share may grow to approximately 15% by 2026.

Chinese manufacturers are also accelerating their strides towards mass productionMore than 10 companies have entered the sample testing and small-batch production stages for 8-inch SiC substrates, including ShuoKe Crystal, Jingcheng Electromechanical, Tianyue Advanced, Nansha Wafer, Tianke Heda, Keyou Semiconductor, Hunan San'an Semiconductor, Chaoxin Star, and Yuehai JinIn terms of investment, several firms such as ShuoKe Crystal, Nansha Wafer, Tianyue Advanced, Tianke Heda, Keyou Semiconductor, and San'an Optoelectronics have announced expansion plans related to 8-inch substrates, preparing to ensure material supply capacity for downstream customers in advance.

Recently, Tianyue Advanced confirmed that it is steadily advancing its plan to expand the 8-inch SiC substrate production capacity at its Lingang factory, which aims for an overall capacity of around 600,000 pieces divided into phased implementations

Concurrently, at the 2024 Munich Semiconductor Exhibition, Tianyue Advanced unveiled its inaugural 12-inch (300mm) SiC substrate products, heralding the dawn of ultra-large SiC substrates.

In June of this year, Silan Microelectronics commenced construction on its 8-inch SiC power device chip manufacturing line project (Silan Jihong) in Xiamen's Haicang DistrictThe total investment for this project is 12 billion yuan, and it will be built in two phases, achieving an annual output of 720,000 pieces (60,000 pieces per month) of 8-inch SiC power device chips upon completion of both phasesThe first phase is expected to invest 7 billion yuan, aiming for initial line setup by the end of Q3 2025 and trial production with a target output of 20,000 pieces by Q4 2025; from 2026 to 2028, capacity ramp-up will continue to reach an ultimate annual capacity of 420,000 pieces of 8-inch SiC power device chips.

In related developments, the first phase of Hunan San'an's SiC project is set to commence full-scale production, aligning with the broader trend of transitioning from 6-inch to 8-inch substrates

All equipment and processes for the second phase project are being optimized for 8-inch productionBy mid-year, the 8-inch SiC production line at Hunan San'an made notable progress, with indications that trial production of 8-inch SiC wafers is projected to commence in December.

Furthermore, recently it was reported by the Xiyong Microelectronics Park official account that the Chongqing San'an Semiconductor SiC substrate factory has completed its main equipment installation ceremonyThe project is reportedly over 95% built and is in the equipment installation and debugging phaseA startup of the substrate factory's operations is anticipated by the end of AugustData indicates that the Chongqing San'an STMicroelectronics SiC project has a total planned investment of approximately 30 billion yuan, aiming to establish the first domestic 8-inch SiC substrate and wafer manufacturing line capable of producing 480,000 pieces of 8-inch SiC substrates and automotive-grade MOSFET power chips, with estimated revenues reaching 17 billion yuan.