TAIPEI, Oct. 28, 2024 — Silicon carbide (SiC) was once in high demand due to substrate shortages. However, a recent report from a technology-focused news outlet revealed a major shift in 2024, where Chinese manufacturers significantly increased production, leading to a sharp decline in prices for mainstream 6-inch substrates and a substantial drop in prices for 8-inch substrates.
China holds a dominant position in the two key application areas for SiC—electric vehicles and solar panels. The Chinese government is aggressively pursuing , raising concerns about the future viability of non-Chinese systems. Taiwanese companies, which have been slower to develop, may navigate this surplus of SiC materials, but they face a complex mix of opportunities and challenges, particularly with the looming threat of large-scale, low-cost competition from China.
Doris Hsu, chairperson of Sino-American Silicon Products (SAS) and GlobalWafers, acknowledged that the changes in the SiC industry this year were unexpected, especially given the substantial capacity increases from Chinese manufacturers that drove prices to unprecedented lows.
Hsu analyzed the situation through two lenses: geopolitics and the characteristics of the SiC industry. She believes that this is a crucial time for Taiwanese manufacturing to capitalize on its strengths. From a geopolitical standpoint, the US, Europe, and Japan are actively working to reduce their dependence on Chinese suppliers, making it less likely that SiC will follow the path of solar energy. These regions are seeking partners to create a more balanced ecosystem, and they see potential in Taiwan.
Taiwanese companies are known for their consistent quality and reliability, and their established presence in silicon-based (Si) semiconductor markets is recognized globally. The rigorous manufacturing standards seen in these sectors can be applied to SiC. In terms of product performance and cost-effectiveness, Taiwanese firms generally outperform their European, American, and Japanese counterparts, though the latter still hold irreplaceable advantages in specific applications, suggesting that a collaborative approach could lead to optimal results.
From an industry perspective, Hsu highlighted that the SiC sector differs from solar energy and LED sapphire. In solar modules, if one cell malfunctions, the remaining cells can still operate, resulting in reduced power output. In contrast, SiC primarily serves medium- to high-voltage power demands, making its role critical as power grids adapt to increasingly volatile electricity inputs. Safety is paramount in automotive applications, and any compromises are unacceptable. Errors in industrial-grade power networks can lead to significant economic losses from sudden outages, while automotive standards prioritize driver and pedestrian safety, exposing Tier 1 suppliers and automakers to substantial liabilities.
Therefore, many mid to high-end Chinese electric vehicles continue to rely on SiC components from international integrated device manufacturers (IDMs), even while adhering to government policies. These manufacturers must prioritize safety and reliability, requiring thorough testing and validation before incorporating SiC components into vehicles. No automaker or utility would willingly accept the substantial risks associated with a single SiC component jeopardizing their operations.
In conclusion, the SiC industry must focus not only on material prices but also on meeting customer expectations for quality and reliability. Currently, SiC substrates are experiencing temporary irrational low prices due to supply-demand imbalances. Despite this, Hsu acknowledges the scale and cost-, predicting that other supply chains, including Taiwan’s, will struggle to match their cost-effectiveness. As SiC substrate prices continue to decline, the range of applicable sectors is set to expand, moving beyond just electric vehicles and solar modules.
SOURCE DIGITIMES ASIA