Silicon carbide (SiC), together with gallium nitride (GaN), are considered by China as "third-generation" semiconductor material key for Beijing's ambition to leapfrog and overtake global competitors in semiconductor development, especially as the country lags behind in silicon-based development.
Thanks to China's growing new energy vehicle industry, SiC has in particular seen growing application, and the compound semiconductor is also expected to be found in other high-voltage applications, especially as the accelerating high performance computing (HPC) sector puts increasing demand on data center energy efficiency.
The growing importance of the sector will continue to drive M&A activities, with three to four major M&A cases expected to take place each year in the upcoming three to five years, according to sources. Despite China's ambition to leapfrog, Chinese SiC industry remains a late comer, and there has been a limited number of large-scale M&A activities in the SiC sector, though the trend will inevitably pick up.
As Gilbert Zhou, President of China-based IDM AccoPower, pointed out to Chinese media Ijiwei, the SiC racetrack in China is already too crowded, and some players will be eliminated, with M&A and restructuring an inevitable development.
To be competitive against international peers who can cover multiple customer needs through different SiC production equipment, China-based SiC players also have to seize the M&A trend to realize horizontal integration, especially when the majority of them can only cover one type of demand.
Meanwhile, approximately 80% of China's large-scale SiC production is based on 150mm wafers, DRAMeXchange reported, and the realization of large-scale production on 200mm wafers has been another focus of China's SiC industry. According to TrendForce, the yield of China's 150mm SiC substrate is 40%, compared to the 60-70% of international players. TrendForce indicates that there are 10 China-based enterprises and institutions involved in the R&D of 200mm substrates, including SemiSiC Crystal, SICC and TankeBlue Semiconductor.
Notably, both SICC and TankeBlue have recently entered partnership with Infineon. In May, Beijing-based TankeBlue entered a long-term agreement with Infineon to supply SiC materials for 150mm wafer production - the quantity reportedly amounts to double-digit percentage share of Infineon's future long-term forecasted demand. In the same month, the Shandong-based SICC also agreed to supply Infineon with 150mm SiC substrate material. and wafers for Infineon's silicon carbide semiconductor manufacturing. Both companies will reportedly facilitate Infineon's transition towards 200mm wafers.
