SiC semiconductor prices fall 30% and industry is on alert

Silicon carbide price drops drastically and creates uncertainty; price wars and mergers promise to transform the future of the sector

Recent industry reports indicate that, since the beginning of this year, the price of SiC substrates of 6 inches has been falling consistently, with a drop of almost 30%. In mid-2024, industry insiders in China revealed that the price of these substrates had dropped below US$ 500approaching the production cost of Chinese manufacturers. In the fourth quarter of this year, prices fell further to US$ 450 or even US$ 400creating a financial pressure significant for most manufacturers.

Currently, there are three main concerns regarding changes in silicon carbide prices in the industry:

• Excess supply: By 2024, global production capacity for growing SiC crystals and substrate materials will see a significant increase. Some industry insiders are concerned this could lead to a oversupply short term in the market.
• Demand for electric vehicles: the growth of electric vehicles (VEs), the largest target application for SiC materials, has shown signs of slowdown in the last two years. This raises doubts about the long-term sustainability of the EV market and whether there are new growth drivers to support continued advances in third-generation semiconductors.
• Price Wars: since the beginning of this year, a price war broke out in the silicon carbide market, directly impacting prices and making the corporate transition and the growth crucial factors for the future.

This article will explore these concerns, examining the perspectives of various industry stakeholders and providing insights to address the aforementioned issues.

SiC industry faces new wave of mergers

Regarding production capacity, statistics from the DRAMeXchange indicate that, in 2024, a total of 14 new 8-inch silicon carbide plants will be built globally (12 under construction, 2 about to start). In the short term, only the plant Mohawk Valley and Wolfspeed will be able to supply 8-inch SiC wafers, with other manufacturers expected to begin production gradually from next year.

Already Chinamore than 50 projects SiC-related expansion plans were initiated in 2023, with a total investment exceeding 90 billion RMB. By 2024, it is expected that more than 100 companies enter the SiC sector, and more than 50 projects are making significant progress.

Sustainability of expansion and mergers

Despite high investments in the silicon carbide sector, insiders expressed concerns about the sustainability of expansion. Although some suppliers are actively expanding, the key question is whether they can continue to operate under conditions of lower pricessince the oversupply remains uncertain. In this environment, the SiC substrate sector is expected to undergo a wave of mergers and acquisitionswhich can remodel the industry scenario.

AI data centers: a new push for semiconductors

Although the electric vehicle market (VEs) has shown signs of weakness, many major SiC manufacturers and automakers have indicated that electric vehicle models powered by SiC continue to grow, and the 8 inch silicon carbide may present new opportunities. Currently, models of 800 V account for around 8,7% of China’s new energy passenger car market, with penetration rates of 800V silicon carbide increasing to 72%.

The growing demand for computing power em artificial intelligence (AI) data centers is seen as a key factor in unlocking the potential of third generation semiconductors.

Price wars and the commercial future of SiC

About price competitioninsiders suggest that while price wars put pressure on some manufacturers’ profit margins, in the long term, this could force the industry to seek more solutions efficient e economic. This could also help SiC technology penetrate further into sectors such as electric vehicles, photovoltaics e industries.

In the Chinese market, the rapid decline in prices is directly related to the growth of local manufacturers who have gained electric vehicle certification and are expanding their production capabilities. Industry experts predict that with the gradual increase in 8-inch SiC production capacitythe cost per SiC device or the unit current density will decline further, potentially marking a turning point for large-scale commercial SiC applications.

With information from News Agencies*