Market Analysis – 11101521 – Silicon carbide

Executive Summary

The global Silicon Carbide (SiC) market is experiencing explosive growth, driven primarily by its adoption in electric vehicle (EV) powertrains and renewable energy systems. The market is projected to reach est. $11.1B by 2028, expanding at a compound annual growth rate (CAGR) of est. 25.1%. While this presents a significant opportunity for efficiency gains in our products, the single greatest threat is supply chain constraint. Intense competition for limited, high-quality SiC wafer capacity is creating price volatility and potential allocation scenarios, demanding a proactive and strategic sourcing approach.

Market Size & Growth

The Total Addressable Market (TAM) for SiC is undergoing a period of rapid expansion, moving from a niche industrial material to a foundational component in high-growth electrification sectors. The primary demand driver is the power electronics segment, specifically for SiC MOSFETs and diodes used in EV inverters, on-board chargers, and DC-DC converters. The three largest geographic markets are 1. Asia-Pacific (led by China), 2. Europe, and 3. North America, reflecting global hubs of automotive and industrial manufacturing.

[Source - Yole Group, Feb 2024]

Key Drivers & Constraints

1. Demand: Electric Vehicles (EVs) - SiC inverters increase EV range by 5-10% and enable faster charging. This performance benefit has made SiC the standard for premium and long-range EVs, with adoption rapidly expanding into mass-market models.
2. Demand: Energy & Industrial - SiC's efficiency and high-temperature tolerance are critical for solar and wind power inverters, industrial motor drives, and next-generation power grids, creating broad-based demand.
3. Constraint: Wafer Supply Bottleneck - The manufacturing of high-quality, low-defect SiC crystal boules and their subsequent slicing into wafers is a complex, slow, and capital-intensive process. Current demand is outstripping supply, particularly for automotive-grade 150mm and emerging 200mm wafers.
4. Constraint: High Production Cost & Energy Intensity - The Acheson process for producing raw SiC powder and the Physical Vapor Transport (PVT) method for growing crystals are extremely energy-intensive, making electricity a major and volatile cost input.
5. Technology Shift: Transition to 200mm Wafers - The industry is migrating from 150mm (6-inch) to 200mm (8-inch) wafers. This transition promises a ~50% reduction in die cost at scale but requires significant R&D and capital investment, creating short-term technical challenges and yield risks for suppliers.

Competitive Landscape

Barriers to entry are High, characterized by immense capital requirements for fabrication facilities (upwards of $1B), extensive intellectual property in crystal growth, and long, rigorous qualification cycles with automotive and industrial customers.

⮕ Tier 1 Leaders * Wolfspeed (USA): A market pioneer and leader in SiC materials (wafers) and devices; aggressively expanding 200mm wafer capacity. * STMicroelectronics (Switzerland): A dominant force in SiC devices, with a key long-term wafer supply agreement with Tesla and a strategy of securing multiple external and internal material sources. * Infineon Technologies (Germany): A top automotive semiconductor supplier rapidly expanding its SiC portfolio and capacity, leveraging its established market access. * ROHM Semiconductor (Japan): A vertically integrated leader known for high-quality devices and significant investment in increasing its own wafer production capacity.

⮕ Emerging/Niche Players * onsemi (USA): Rapidly growing its SiC presence through vertical integration, including the acquisition of GT Advanced Technologies for boule supply. * SICC Co. (China): A leading Chinese supplier of SiC wafers, benefiting from strong domestic government support and EV market growth. * Fiven (Norway): A major producer of SiC grains and powders (the raw material), but not vertically integrated into wafers or devices. * Navitas Semiconductor (USA): Acquired GeneSiC to enter the SiC market, complementing its core Gallium Nitride (GaN) business.

Pricing Mechanics

The price of finished SiC devices is heavily weighted towards the cost of the substrate (wafer), which can account for 40-60% of the final component cost. The price build-up begins with raw materials (petroleum coke, silica sand), which are converted into SiC grain via the energy-intensive Acheson process. This grain is then purified and used to grow a crystal boule via the PVT process—the most complex and costly step. The boule is sliced, ground, and polished into finished wafers, with yield loss at each stage contributing significantly to the final cost.

Device fabrication on the wafer represents the remaining cost. The most volatile cost elements are linked to the substrate manufacturing process and underlying commodity inputs.

• SiC Wafer Substrates: Price increases of est. 10-15% over the last 18 months due to severe demand/supply imbalance.
• Electricity: Spot prices in key manufacturing regions have seen volatility of >30%, directly impacting costs for energy-intensive crystal growth.
• Petroleum Coke: A key raw material whose price is tied to oil markets, experiencing fluctuations of est. 20-25% over the last 24 months.

Recent Trends & Innovation

• Vertical Integration & Capacity Expansion (Ongoing): Major players are investing billions to secure their own supply of SiC wafers. Wolfspeed is building the world's largest SiC materials factory in North Carolina, and onsemi is expanding its boule production in New Hampshire. [Multiple Company Announcements, 2022-2024]
• Strategic M&A (Aug 2022): Navitas Semiconductor acquired GeneSiC Semiconductor for $100M, immediately providing it with a portfolio of SiC device technology and revenue, signaling a strategy to offer both GaN and SiC solutions.
• Government Industrial Policy (Aug 2022): The US CHIPS and Science Act was signed into law, providing $52.7B in funding to boost domestic semiconductor research and manufacturing. This directly benefits US-based SiC producers like Wolfspeed and onsemi, aiming to de-risk the supply chain.
• 200mm Wafer Production Milestone (Apr 2022): Wolfspeed announced it had begun producing SiC devices at its 200mm-capable Mohawk Valley Fab in New York, the first of its kind, marking a critical step toward reducing long-term SiC costs.

Supplier Landscape

Regional Focus: North Carolina (USA)

North Carolina is emerging as the epicenter of the US silicon carbide supply chain. The state is home to Wolfspeed's global headquarters and its existing materials production facility in Durham. More significantly, Wolfspeed is investing $5B to construct the world's largest SiC materials factory in Chatham County, NC, projected to be fully operational by 2030. This single project will increase the company's SiC wafer fabrication capacity by 10x. The state and local governments have provided an incentive package worth over $1B. This massive local capacity expansion provides a unique opportunity to secure supply with reduced logistical and geopolitical risk. The primary challenge will be competition for skilled labor in the region.

Risk Outlook

Actionable Sourcing Recommendations

1. Secure Long-Term Agreements (LTAs) with Vertically Integrated Suppliers. Prioritize suppliers like Wolfspeed and onsemi who control their own substrate supply. Pursue a 3-5 year LTA to lock in volume commitments and gain preferential access to new capacity (e.g., Wolfspeed's NC facility). This mitigates exposure to the volatile wafer spot market and de-risks supply continuity for critical programs.

2. Align Product Roadmap with Supplier 200mm Wafer Transitions. Engage engineering and R&D teams now to begin qualification of SiC devices built on 200mm wafers. Early alignment with supplier roadmaps (e.g., Wolfspeed, Infineon) ensures access to next-generation capacity and secures a long-term cost-down path. This proactive step prevents being locked into legacy 150mm supply, which will see less investment over time.