Facing the anticipated slowdown in the automotive market growth in 2024, Taiwan's supply chain is confident that the impact will not be significant.
Measures to return to normal growth cycles have already been initiated early. However, some automotive system companies venturing into the semiconductor field express that the sales situation of Silicon Carbide (SiC) in 2024 is relatively worth observing.
Despite active Chinese involvement in the SiC sector in recent years, which has accelerated global development, current observations suggest that SiC is still experiencing a significant shortage. The main reason is attributed to concerns about the quality of Chinese manufacturers, especially regarding whether SiC can be applied in large quantities for long-term use in vehicles.
Despite the anticipated growth slowdown, the global penetration rate of electric vehicles (EVs) will continue to rise. With advancements in automotive technology, modern EVs emphasize performance and introduce SiC for "weight reduction effects," contributing to the ongoing high demand for electric vehicles.
Companies in the automotive parts supply chain began adjusting inventory and shipments in the second half of 2023, preparing for the predicted slowdown in EV growth. Customer orders for 2024 have been gradually shipped, and although the Lunar New Year holiday and the 228 Memorial Day in February are expected to impact overall first-quarter performance, everything is within a manageable range.
As customer inventory adjustments bottom out, new orders continue to pour in. This provides the supply chain with more confidence in demand and shipping schedules for the new year.
Manufacturers note that, driven by demand from both two-wheel and four-wheel electric vehicles, some automotive electronics system companies have been diversifying into the semiconductor field for several years. Moreover, the experience of the previous chip shortages has led these companies to invest more resources in this area.
However, with more carmakers revising or adjusting their electric vehicle production plans, concerns arise among manufacturers about whether the increasing demand for SiC in inverters will be affected. Major automakers including General Motors (GM), Ford, and Volkswagen, declared in 2023 that they would adjust their electric vehicle production plans.
SiC prices remain relatively high. However, iterative updates of other system component technologies are leading supply chain companies to gradually reduce related costs, and prices of SiC components or systems for vehicles are approaching a sweet spot.
Although the quality of China's SiC components is still debatable, the country is catching up. It is expected that 2024 to 2025 will be the time when production capacity gradually opens up.
It is estimated that the overall supply and demand balance of SiC will be achieved around 2027.
Article translated by Samuel Howarth
