The recent partnership between STMicroelectronics and China-based Sanan Optoelectronics is the latest case showing the European automotive supply chain is striving to gain a presence for its SiC devices in China.
In May, Infineon signed a SiC agreement with China-based SICC and TankeBlue Semiconductor. Leading tier-1 supplier Bosch also secured a similar partnership with SICC.
Sources said these collaborations probably have been fostered for a while. They are revealed at this point likely because China is actively luring foreign investment after lifting COVID restrictions. It might also mean the companies highly anticipate China's SiC technology and market development, so they have to secure a place in the market.
The competition among top power semiconductor manufacturers has been the focus. STM's SiC module gained significant traction thanks to Tesla Model 3, defeating Infineon to become the largest SiC device provider.
In the first quarter of 2023, Tesla said it will significantly reduce SiC use by 75% in future models. The move aligns with the feature of STM's next-generation SiC modules, showing the close relationship between the two companies.
While Infineon lost some market share, its leading position in power components remains solid as it has a portfolio containing IGBT, SiC, GaN products. Its technology can be found in various industries.
Bosch has been developing its SiC devices early on and working with Chinese companies. The partnership aims to secure critical components supply and help Bosch localize in the country.
Leading power semiconductor companies are growing their footprints in China. Infineon is the fewer case of major European and US IDMs that do not produce its SiC substrates. The company signed contracts with China-based suppliers for 6-inch and 8-inch substrates, remaining a power component leader in the country. As China emphasizes the self-efficiency of technology, Infineon will see positive results with deeper local ties.
STM and Sanan's connection can be dated back to 2019 when STM purchased shares of Sweden-based SiC chip company Norstel from Sanan. The Chinese company was facing a financial crisis, so it sold Norstel the second year after getting the ownership.
Sources said Sanan has since developed its SiC technology and earned recognition from the market. It has gained traction in industrial and automotive SiCs, including its SiC MOSFET being adopted by the automotive supply chain in China.
Notably, the partnership between STM and Sanan focuses on the promising 8-inch SiC. To accelerate the cooperation, Sanan plans to build a dedicated plant to produce 8-inch SiC substrates. In addition, support from the Chongqing government is likely a key to the project.
SiC substrates have been the primary obstacle for the SiC industry development due to the unstable yield. Therefore, SiC substrate supply has remained tight for years, resulting in ongoing high prices.
Companies worldwide are actively investing in the technology. Wolfspeed is working on manufacturing the 8-inch substrate only for contract customers or itself.
There is an interesting dynamic between Wolfspeed and European or US IDMs. The European and US IDMs rely on Wolfspeed for IC substrates more or less while they compete for the SiC component market.
As a result, except for Infineon, IDMs have invested in crystal growth and built partnerships to expand their ecosystems. China has been their critical partner thanks to its experience in crystal growth and a huge demand within the country.