The silicon carbide (SiC) market, once a hotbed of substrate shortages, has experienced a dramatic shift in 2024. Chinese manufacturers have dramatically ramped up production, resulting in a price collapse for mainstream 6-inch SiC substrates and a steep decline in 8-inch prices. This surge in Chinese production has significantly impacted the global SiC landscape, posing both opportunities and challenges for companies worldwide.
China’s dominant position in the two major application areas for SiC—electric vehicles (EVs) and solar panels—has solidified its influence. The Chinese government’s aggressive pursuit of semiconductor self-sufficiency has raised concerns about the future viability of non-Chinese SiC supply chains.
Taiwanese companies, known for their expertise in silicon-based semiconductors, are navigating this complex environment. Doris Hsu, chairperson of Sino-American Silicon Products (SAS) and GlobalWafers, acknowledges the unexpected changes in the SiC industry, particularly the impact of Chinese manufacturers’ significant capacity increases.
Hsu highlights the geopolitical and industrial dynamics shaping the market. Geopolitically, the US, Europe, and Japan are actively seeking to reduce their reliance on Chinese suppliers, creating opportunities for alternative supply chains. Taiwan, with its established presence in silicon-based semiconductors and a reputation for quality and reliability, is well-positioned to fill this gap.
Furthermore, Taiwanese companies generally outshine their European, American, and Japanese counterparts in terms of product performance and cost-effectiveness, although the latter still hold crucial advantages in specific applications. This suggests that a collaborative approach between Taiwanese and Western companies could yield optimal results.
From an industrial perspective, Hsu emphasizes that the SiC sector differs significantly from solar energy and LED sapphire. Unlike solar modules, where a single cell malfunction does not cripple the entire system, SiC serves critical functions in medium- to high-voltage power demands and automotive applications.
The safety and reliability of SiC components are paramount in these critical sectors. In automotive applications, any compromise can have severe consequences for driver and pedestrian safety. Similarly, errors in industrial-grade power networks can lead to significant economic losses. Consequently, many mid to high-end Chinese electric vehicles continue to favor SiC components from international integrated device manufacturers (IDMs) despite government policies.
This reliance on international suppliers for critical SiC applications underscores the importance of quality and reliability. Manufacturers must prioritize rigorous testing and validation before incorporating SiC components into vehicles, as any failure could have catastrophic consequences.
The SiC market is undergoing a period of significant change, driven by China’s dominance in production and the global need for reliable and high-quality components. While Chinese manufacturers are currently enjoying cost advantages, Taiwanese companies have the potential to leverage their strengths in quality, reliability, and cost-effectiveness to secure their place in this evolving market. As the SiC market continues to mature, the focus will shift from merely price competition to meeting customer expectations for quality, reliability, and safety. The future of the SiC industry will be shaped by the ability of companies to adapt to these changing dynamics and deliver products that meet the evolving needs of a global market.
