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In a report, Chinese-language business daily Caixin said that silicon carbide wafer manufacturers will be the biggest beneficiary of the increasing competition between China’s EV makers.
The report quotes a Chinese investment manager who declined to be named as a result of his position. Caixin is China's leading business daily and its reporters are closely networked with China government officials.
Caixin reports that high-quality SiC chips produced by international manufacturers vs. lower-quality Chinese wafers are increasingly hard to find, and that there is a pressure on supply.
“Everybody is fighting for SiC wafers,” the investment manager told Caixin. “It is hard to lay hands on wafers produced by first-tier major international suppliers, such as Wolfspeed, Inc. (NYSE:WOLF),” the manager said.
The world’s largest SiC wafer manufacturers comprise STMicroelectronics N.V. (NYSE:STM), Infineon Technologies AG (OTC:IFNNY), Wolfspeed, Rohm Co. Ltd. (OTC:ROHCY), ON Semiconductor Corp. and Allegro Microsystems, Inc. (NASDAQ:ALGM). The source said that these companies in particular would be seeing increasing demand over the near-term.
“It is expected that the demand for SiC wafers will still exceed the supply in the next one to two years,” the source said.
“Although it is possible to buy wafers produced by second-tier suppliers, such as SICC Co. Ltd. and TanKeBlue Semiconductor Co. Ltd., it will take a long time for them to deliver the orders as much of their production capacity is taken by orders from major suppliers, like Infineon Technologies AG. (OTC:IFNNY).”
Automakers such as Li Auto Inc. (NASDAQ:LI), XPeng Inc. (NYSE:XPEV), Nio Inc. (NYSE:NIO) and Geely Automobile Holdings Limited (OTC:GELYF) have recently adopted SiC waifers, which create much faster charging capabilities for energy efficient vehicles.
Tesla Inc. (NASDAQ:TSLA) was the first automaker to introduce SiC wafers, although the company has since said it has figured out ways to cut back on its usage of Silicon Carbide chips as part of its cost-reduction strategy to make its cars more profitable.
Traditional car makers turning to the EV market such as Mercedes-Benz Group AG (OTC:MBGAF), BMW (OTC:BMWYY), Volkswagen AG (OTC:VWAPY) and Toyota Motor Corp. (NYSE:TM) in particular are ordering increasing numbers of SiC wafers to fuel them as unlike Tesla, they have not figured out ways to cut back on their usage, according to China VCs.
All this demand in an increasingly-crowded EV space is putting upward pressure on prices of SiC waifers as suppliers can’t keep up with the demand from automakers, the Caixin report said. If Li Auto alone wanted to use SiC chips in all its June delivery vehicles, it would need 5,000 six-inch SiC waifers which is more than any production line in China can supply in a month, Lu Xiaobao, managing director of China VC CAS Star told Caixin.
Posted In: ALGM BMWYY GELYF IFNNY LI MBGAF NIO ROHCY STM TM TSLA VWAPY WOLF XPEV
