Since the beginning of this year, the prices of mainstream 6-inch silicon carbide (SiC) substrates have continued to decline, and it is expected that prices will continue to decline as Chinese SiC substrate suppliers expand production. By mid-2024, the price of 6-inch SiC substrates will fall below $500 per piece, which is usually considered a production cost level. If the price continues to fall, most manufacturers will suffer losses. But sources pointed out that prices further dropped to $450 or even $400 in the fourth quarter. The production capacity of SiC substrates in China is growing rapidly, but the yield rates of various suppliers are different. The intensification of competition has led to a sharp drop in prices, and the downward trend in prices has actually prevented customers from placing orders because they are waiting for prices to fall to the lowest point. Many SiC substrate suppliers have realized that their pricing hardly stimulates demand. Industry insiders say that customers are also concerned about the sustainability of the supply chain. For automotive SiC applications, the verification process takes six months to a year to complete. The customer is concerned that after the verification is completed, the supplier may have already gone bankrupt. Therefore, customers are very cautious when choosing suppliers, which is slowing down channel sales. Price competition has not only affected second - and third tier SiC substrate suppliers in China, but also top tier suppliers. Top suppliers are not willing to lower prices, but in order to avoid losing orders, they are forced to participate in price games. In other words, most suppliers are selling 6-inch SiC substrates at a loss. Integration is coming soon According to industry insiders, despite rapid capacity expansion and price wars, the initial expectation was that the 6-inch SiC substrate industry would not see consolidation until at least 2026. The price competition in the SiC market is more intense than expected, coupled with fierce competition in the electric vehicle (EV) and photovoltaic power generation markets (the largest market for SiC equipment), which has brought tremendous pressure to SiC suppliers. In the case of a shortage of SiC substrates in the market, the price difference between domestic first-line suppliers and international competitors is 5-10%. As of the end of 2023, the price of 6-inch SiC substrates from international manufacturers is still above $850. It is expected that by 2024, the production capacity of Chinese suppliers will reach a level sufficient to meet more than half of the global demand. Shandong Tianyue, Tianke Lanke, Sanan and other top tier Chinese suppliers have entered the power device supply chain of international IDM manufacturers. Shandong Tianyue achieved profitability in the first half of 2024 after two consecutive years of losses. The profitability of Shandong Tianyue is gradually improving, indicating that even in the face of fierce competition, especially in the case of sustained price declines, Chinese companies have sufficient ability to cope. Obviously, the output of large-scale manufacturing is increasing, and economies of scale provide a cost competitive advantage. On the other hand, Wolfspeed, the global market leader in SiC substrates, has not yet achieved its set profit target. According to domestic SiC industry insiders, the new production capacity of SiC crystal growth and substrate materials will be significantly increased in 2024, but industry insiders are concerned that supply will exceed demand from a supply and demand perspective. Especially the growth of electric vehicles, which are the biggest target applications of SiC materials, has slowed down, and the outbreak of price wars has also had an impact on the pricing requirements of SiC. Growing Chinese SiC Enterprises From the perspective of the capacity expansion scale of China's top SiC material suppliers, it is expected that by 2024, it will be sufficient to meet 50% of global demand. Shandong Tianyue is rapidly developing a new generation of sizes to expand its market share in the 8-inch SiC market. Shandong Tianyue attributed its positive performance in the first half of 2024 to the strong demand for high-quality SiC products, especially the accelerated penetration in the electric vehicle field; And the rapid development of conductive SiC substrates, close cooperation with major international manufacturers, and significant advantages in automotive grade products. Jingke Electronics, a SiC substrate manufacturer in Guangzhou, is looking for business opportunities in Taiwan, China, China. At the recently concluded SEMICON Taiwan 2024, JinkoSolar showcased its products. In 2024, Jinko Electronics will gradually put into production the annual production capacity of 200000 6-inch SiC substrates built in 2023. Its capacity expansion is currently concentrated in the 8-inch field and will stop adding new 6-inch capacity. At present, the company can produce 2000 8-inch SiC substrates per month, and it is expected that the monthly output will reach 5000 substrates by the end of 2024. The company plans to expand its 8-inch annual production capacity to 100000 pieces by the end of 2024. SiC substrate company increases cooperation with IDM At present, the main domestic suppliers Shandong Tianyue and Tianke Heda have obtained international IDM certification. IDM certification enables Shandong Tianyue and Tianke Heda to maintain stable shipment volume, price, and profit in the fiercely competitive overall SiC substrate market in 2024. Due to the larger surface area of an 8-inch substrate compared to a 6-inch substrate, it has higher production yield and cost-effectiveness, which is why IDM is more enthusiastic about 8-inch production. More and more 8-inch wafer fabs are transitioning to producing SiC wafers, providing IDM with more 8-inch SiC production capacity. Due to the high technological threshold, there are currently not many suppliers in mainland China that can ship 8-inch SiC substrates. Therefore, domestic SiC substrate suppliers have the opportunity to establish cooperative relationships with IDM for 8-inch SiC. In Taiwan, China, potential customers of 8-inch SiC substrate include MediaTek, Hongyang Semiconductor, Maosi Electronics and Episil Technologies.