Recently, Guangdong Xinyue Energy Semiconductor Co., Ltd. (hereinafter referred to as "Xinyue Energy"), in which Geely participated in investment, underwent a business registration change, adding Guotou (Guangdong) Science and Technology Achievement Transformation Venture Capital Fund Partnership Enterprise (Limited Partnership) and other shareholders. The registered capital increased from 400 million yuan to approximately 455 million yuan. Not long ago, Xinyue Energy announced the completion of a Series A financing of approximately one billion yuan to accelerate capacity expansion.

We mainly produce and develop silicon carbide wafers, and have also developed our own open silicon carbide chip processing platform, which can produce 6-inch wafers and provide OEM services for other enterprises, "said a person in charge of Xinyue Energy to the Economic Observer.

Xinyue Energy, positioned as a wafer foundry, has attracted capital attention and is a microcosm of the popularity of silicon carbide power devices. Currently, the entire silicon carbide industry chain is accelerating the mass production of power devices. But in the trend of wafer expansion, domestic enterprises have not yet surpassed the production threshold of 8-inch wafers.

Silicon carbide devices are highly sought after

Faster charging speed is an important way to solve the "range anxiety" of electric vehicles. Since 2019, vehicle brands including Porsche, Xiaopeng Motors, Ideal Motors, Jike Motors, Avita, and Wenjie have all launched 800V high-voltage systems, with the key being silicon carbide power devices.

Given the limited performance of traditional silicon-based power devices, silicon carbide power devices with better performance have become an essential component for achieving high-voltage fast charging. High voltage systems equipped with silicon carbide power devices can generally charge the battery from 10% to 80% in just over ten minutes.

In this context, silicon carbide power device manufacturers have received a lot of attention. At the first Global Investment and Talent Introduction Conference in Nansha, Guangzhou on October 18th, Xinyue Energy announced the signing of contracts with representatives from 8 investment parties. This round of financing for Xinyue Energy is jointly led by the Guangdong Integrated Circuit Fund Phase II and the China Investment and Entrepreneurship Fund, with participation from the Social Security Bay Area Science and Technology Innovation Fund, Shenzhen Venture Capital, Guangzhou Production Investment, Kejin Holdings Group, Volkswagen Juding, Boyuan Capital, and other investors. Several of the investors have Guangdong state-owned assets background.

Xinyue Energy was established in 2021 as a joint venture between its parent company Guangdong Xinyue Energy Semiconductor Co., Ltd. (hereinafter referred to as "Xinyue Energy") and Weirui Electric Vehicle Technology (Ningbo) Co., Ltd. (hereinafter referred to as "Weirui"). Its headquarters is located in Nansha Free Trade Zone, Guangzhou, and it mainly produces power devices such as silicon carbide SBD/JBS, MOSFET, IGBT, etc. in the automotive grade and industrial control fields.

The silicon carbide power module of Xinju Energy was applied in the smart elf # 1 joint venture between Mercedes Benz and Geely, as well as the Jike 009, 001 and other models in 2022, becoming the first silicon carbide main drive module provided by a third party and entering mass production for passenger cars in China.

The reason why Xinyue Energy's silicon carbide products are able to get on board first is mainly due to its strong relationship with Geely Automobile. Xiao Guowei, the founder of Xinju Energy, collaborated with Geely Automobile as early as 2018. At that time, Xinju Energy invested 900 million yuan to build a wafer silicon carbide substrate production base in Nansha. It was officially put into operation in 2019 and the output value reached 399 million yuan in 2023.

Not only Geely is accelerating investment and expansion in silicon carbide power devices, but most vehicle manufacturers have also increased their investment in silicon carbide power devices. The Zhixin Semiconductor silicon carbide module under Dongfeng Group was installed in relevant vehicle models last year. BYD also revealed that it is developing silicon carbide power devices. On October 22nd, FAW Hongqi announced that the silicon carbide power chip independently designed by the Power Electronics Development Department of the New Energy Development Institute of the R&D General Institute has completed its first chip fabrication.

In addition, companies such as Sida Semiconductor, CRRC, Sanan Optoelectronics, CR Microelectronics, Painjie, and Xinju Energy are also laying out automotive grade silicon carbide products.

The domestic industrial chain is relatively scattered

The market prospects for silicon carbide power devices are very promising. According to Yole, a professional organization in the MEMS and semiconductor fields, the market value of SiC devices is expected to reach nearly $10 billion by 2029, with a compound annual growth rate of 24% from 2023 to 2029.

In the past, almost all of China's onboard power devices were silicon-based IGBTs. In 2018, Tesla replaced the main inverter of its Model 3 model with SiCMOSFET power modules produced by STMicroelectronics (ST) instead of traditional silicon-based IGBTs, driving Chinese car companies to follow suit and opening the curtain for the rapid development of China's silicon carbide semiconductor industry.

The silicon carbide industry chain is mainly divided into four links: substrate, epitaxial, device, and application. Substrate materials are the foundation of the industry chain, epitaxial materials are the key to device manufacturing, devices are the core of the industry chain, and applications are the driving force for industry development. Among them, substrate and epitaxy account for 60% of the industry chain cost, which is the main value of the industry chain.

At present, the foreign silicon carbide semiconductor industry chain is mainly vertically integrated in multiple links, while the domestic industry chain is relatively scattered. Except for Sanan Optoelectronics and research institutes under China Electronics Technology Group, which adopt a full coverage model of the industry chain, the vast majority of manufacturers focus on a specific link in the industry chain.

Before 2022, the supply of SiC wafer suppliers was very limited, with companies such as Infineon and Bosch, as well as various contract manufacturers, mainly purchasing SiC wafers from external sources. As a wafer foundry, Xinyue Energy has found an opportunity from it.

Xu Wei, CEO of Xinyue Energy, once said, "There is a huge demand for power devices in the market, but the insufficient production capacity of silicon-based platforms is prominent. The industry needs to make up for the relatively short board of domestic silicon carbide chip processing platforms. Xinyue Energy is currently stepping on the pace of market development

We don't do the packaging and testing of silicon carbide chips, which are done downstream. Our parent company, Xinyue Energy, can also be responsible for it, "said the person in charge of Xinyue Energy.

Xinyue Energy will invest a total of 7.5 billion yuan to build a production line with an annual output of 240000 6-inch and 240000 8-inch silicon carbide wafer chips. According to the plan, the first phase of Xinyue Energy's production line will be put into operation by the end of December 2024, and the second phase of production capacity construction will begin in 2025. The first and second phases of production capacity will be achieved by 2026. At present, the production line of Xingyue Energy's automotive grade silicon carbide chips has entered the mass production stage.

8-inch threshold

From the perspective of the production scale of silicon carbide power device manufacturers, foreign manufacturers such as STMicroelectronics, Infineon, Wolfspeed, ROHM, and ON Semiconductor rank high. However, with the trend of increasing wafer size, a new technology competition has arrived. Wolfspeed is the only company in the world producing 8-inch wafers, "a semiconductor industry analyst told Economic Observer.

It is understood that the larger the wafer size, the smaller the edge waste and the more chips can be cut out. Taking a chip with a size of 5mm x 5mm as an example, an 8-inch wafer can actually cut 1080 chips, while a 6-inch wafer can only make 576 chips. Compared to 6 inches, the advantages of 8-inch silicon carbide mainly lie in potential cost, performance, and parameter uniformity, "said Wei Wei, General Manager of Shenzhen Basic Semiconductor Co., Ltd.

According to Tianke Blue data, upgrading silicon carbide wafers from 4 inches to 6 inches can reduce unit costs by 50%, and upgrading from 6 inches to 8 inches can further reduce costs by 35%. In addition, the current 6-inch silicon carbide process equipment is mainly based on the transformation of 6-inch silicon process equipment. Due to the limitations of equipment structure design, there is a significant gap in performance compared to 8-inch process equipment in many aspects.

According to the "2024 Silicon Carbide (SiC) Industry Research White Paper", as of June 2024, 30 companies worldwide are currently or plan to promote the construction of 8-inch SiC wafer production lines, including 13 Chinese companies. International leaders Wolfspeed, II-VI, and domestic leader Tianyue Advanced have all successfully developed 8-inch substrate products.

6-inch silicon carbide wafers are still the mainstream choice for current enterprises, and the Beijing Semiconductor Association expects this situation to continue until 2029. In terms of demand, 6-inch wafers are being commercialized and prices have significantly decreased; On the supply side, most equipment manufacturers continue to expand their 6-inch wafer production capacity.

At present, there are still challenges such as yield and warpage control in the 8-inch silicon carbide substrate market. As the size increases, the technical difficulty will become even greater. "The semiconductor industry analyst mentioned above stated that different process routes, equipment, and consumables from 6 inches to 8 inches need to be redesigned and run in, and there are also challenges such as suppressing crystal growth. The 8-inch silicon carbide substrate in China has not yet entered the mass production verification stage, and to overcome this threshold, it requires the collaborative cooperation and technological innovation of the entire industry chain.