The rapid expansion of the SiC market is primarily attributed to the demand for electric vehicles, with the market expected to grow by 60% in 2023 compared to the previous year.

In March 2024, Yole Group, a French market research firm, released a market research report on SiC (Silicon Carbide) / GaN (Gallium Nitride). The report states that the SiC power device market is projected to reach $10 billion by 2029. The swift growth of the SiC market is mainly driven by the demand for EVs (Electric Vehicles), with an anticipated increase of 60% in the market in 2023 over the previous year.

By 2029, WBG semiconductors are expected to account for 35% of the power device market. In the power electronics market by 2029, products utilizing wide bandgap (WBG) semiconductors such as SiC and GaN are projected to represent over 35% of the total volume, with SiC expected to constitute 26.8% of the total share.The rapid growth of the SiC/GaN power device market began around 2018-2019 and has continued to the present day. The SiC power device market initially gained momentum when Tesla adopted SiC in the inverter of its electric vehicle "Model 3," but now 800V high-speed electric vehicle charging has become a trend.

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Electric vehicles using SiC power devices are now being mass-produced, such as BYD's "Han" and Hyundai's "IONIQ 5." By 2023, major device manufacturers such as STMicroelectronics, ON Semiconductor, Infineon Technologies (hereinafter referred to as Infineon), Wolfspeed, and ROHM are expected to set a new record in revenue from SiC power devices. By 2025, the sales of SiC power devices from these companies are projected to exceed $1 billion, and many companies plan to expand their facilities in the coming years.

Yole anticipates that the SiC power device market will grow to another level in the coming years, as the momentum is not only in the automotive sector but also in industrial/energy/railway applications.

Yole states that the SiC wafer/epi market saw strong growth in 2023, particularly in China, due to large-scale capacity expansion, but there are now concerns about overcapacity. The SiC-related market faces headwinds in the first half of 2024, with Tesla, a major customer for SiC power devices, expecting a slowdown in growth. It is said that companies in the supply chain are reducing inventory levels, waiting for the market to recover in the second half of 2024.

The GaN power device market continues to grow at a high speed, reaching $2.5 billion by 2029.

The GaN power device market is primarily driven by consumer applications. Recent trends include higher output power for chargers and higher efficiency/miniaturization for home appliance power supplies and motor drivers. Expectations for GaN power devices in automotive and data center applications are also increasing, with the GaN power device market projected to grow to $2.45 billion by 2029.

In the GaN power device industry, the business model of vertically integrated device manufacturers (IDMs) is expected to become more dominant in the future, and integration among participants is progressing. Infineon's acquisition of GaN Systems is the largest acquisition in the industry to date, totaling $830 million. Renesas Electronics also announced the acquisition of Transphorm for $339 million, which is expected to be completed in the first half of 2024.Overall, from 2023 to 2029, the GaN power device market is expected to expand at a compound annual growth rate of 45%, reaching over $2.45 billion by 2029. This rapid growth has sparked interest, with investments announced over the past six months exceeding $1.6 billion, including mergers and acquisitions and other financing.

China is very optimistic about the application prospects of the third-generation semiconductor. In recent years, the country has continuously introduced relevant policies to support the development of the third-generation semiconductor. In July 2016, the State Council's "Notice on Printing and Distributing the National Science and Technology Innovation Plan for the 13th Five-Year Plan" clearly stated the development of the third-generation semiconductor chips; in November 2019, the Ministry of Industry and Information Technology included the third-generation semiconductor products in the "Guidance Catalogue for the First Batch of Application Demonstration of Key New Materials"; in December 2019, the "Yangtze River Delta Regional Integration Development Plan Outline" clearly required to accelerate the cultivation and layout of the third-generation semiconductor industry, promoting high-quality development of the manufacturing industry; in July 2020, to encourage enterprises to actively develop integrated circuits, the state reduced taxes for related enterprises; in March 2021, the 14th Five-Year Plan specifically proposed the development of the third-generation semiconductor; in August 2021, the Ministry of Industry and Information Technology included the third-generation semiconductor in the "14th Five-Year Plan" industrial science and technology innovation related development.

Domestic and foreign manufacturers are actively deploying silicon carbide, and the industry chain is becoming more and more perfect. The SiC substrate market is highly concentrated, and in 2020, Shandong Tianyue's share in the semi-insulating type market reached 30%. Superstar is one of the few domestic companies that master both PVT and HTCVD crystal growth technology routes. Representative domestic silicon carbide epitaxial manufacturers such as Dongguan Tianyu and Han Tiancheng have successfully developed 6-inch silicon carbide epitaxial wafers and are gradually achieving commercialization. Domestic manufacturers entered the SiC power device field relatively late and currently have a small market share, but due to the early stage of the industry, the pattern has not yet been finalized. Changfei Advanced Semiconductor adopts the IDM model, covering the entire industry chain from epitaxy, design, wafer manufacturing, to module. Currently, its SiC MOSFET has the first production capacity and planned capacity in the country, and its products have passed the certification of leading car manufacturers and Tier1 customers, making it one of the first domestic manufacturers to enter the new energy vehicle main drive inverter.

Silicon carbide substrate materials are the most valuable part of the silicon carbide industry chain. The production process of silicon carbide devices can be divided into substrate processing, epitaxial growth, device design, manufacturing, packaging, and other links. There is a more significant value quantity inversion phenomenon in the industry chain, where substrate manufacturing has the highest technical barriers and the largest value quantity. In the silicon carbide industry chain, silicon carbide substrates account for about 47% of the cost of silicon carbide devices. For silicon-based devices, wafer manufacturing accounts for 50% of the cost, and silicon wafer substrates only account for 7% of the cost. Looking at the penetration rhythm of different industries, the 800V platform and silicon carbide have come together to promote new energy vehicles to become the largest explosive market in 2023. In the sub-application, the main inverter, as the most core and valuable field, has adopted a pure SiC MOSFET replacement solution, and OBC and DC-DC are still using SiC SBD as a near-term transition.

With the continuous expansion of the application fields of the gallium nitride industry, the market size of China's gallium nitride industry is also expanding. The current application fields are mainly concentrated in consumer electronics, new energy vehicles, photovoltaic and energy storage, data computing centers, and other fields. There are many domestic gallium nitride start-ups, and the industry concentration is relatively dispersed, but GaN IDM companies represented by Innosilicon have obvious advantages, which can cover different downstream application scenarios and independently master the process and production capacity to ensure that they will continue to increase market share in the future.

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