Double the investment amount against the cycle, and usher in a "turning point" for the domestic power semiconductor industry?

According to a report from Jiwei Network, the semiconductor downturn cycle seems to have no impact on the steady growth of the domestic power semiconductor market.

Driven by the application of new energy vehicles, energy storage and power generation industries, as well as the mature application of new materials such as silicon carbide and gallium nitride in high-voltage scenarios, the construction boom of domestic power semiconductor industry projects has continued in the past two years, presenting a lively scene and gradually increasing investment and scale.

According to statistics from Jiwei Network, the total investment scale of power semiconductor related projects that have made progress (such as signing contracts, opening/completion, and production) in 2022 exceeds 110 billion yuan. In the first half of 2023 alone, the total investment in power semiconductor related projects that have made progress has exceeded 100 billion yuan, and as of the end of September this year, this number has reached 150 billion yuan. Among them, newly signed projects account for a large proportion. Realize the landing of 40 billion yuan worth of newly signed power semiconductor projects throughout 2022; In the first nine months of 2023, the landing of over 80 billion yuan worth of newly signed projects undoubtedly achieved countercyclical growth.

Countercyclical growth, the driving force for the development of power semiconductors continues to flow

Power semiconductors are mainly used for energy conversion and circuit control in power equipment, and are the core devices for energy processing. The subdivided products mainly include MOSFETs, IGBTs, BJTs, etc. Among them, IGBT, as a new type of power semiconductor device, is internationally recognized as the most representative product of the third revolution in power electronics technology.

At present, with the increasingly urgent demand for energy conservation and emission reduction in countries around the world, power semiconductor devices have moved from traditional industrial control and 4C (communication, computer, consumer electronics, automotive) fields to many industries such as new energy, new energy vehicles, rail transit, smart grids, variable frequency home appliances, etc. According to Yole's data forecast, by 2025, the global market size for power semiconductor discrete devices and modules will reach $7.6 billion and $11.3 billion, respectively.

Against the backdrop of large-scale investment, China's power semiconductor project investment has also shown characteristics of covering multiple links in the industry chain and multiple application scenarios in terms of production capacity. In terms of industry chain construction, it covers various project categories such as wafers, substrates, devices, equipment, and modules; On the application side, new energy vehicles have become a concentrated direction for new construction projects, but there are also investments in areas such as rail transit and smart grids by companies like CRRC Times.

It is worth mentioning that CRRC has successively invested in the construction of power semiconductor projects in Zhuzhou, Yixing and other places. In June of this year, its parent company, Times Electric, announced that "CRRC Times Semiconductor has formed a certain industrial competitive advantage" and "the demand for capacity expansion is urgent". It agreed to launch a new round of financing for CRRC Times Semiconductor to invest in the industrialization construction project of medium and low voltage power devices, with a total amount of approximately 11118.69 million yuan.

Investment increases, SiC production capacity construction accelerates

For a considerable period of time, the power semiconductor market has been dominated by established players from Europe, the United States, Japan, and other regions. With the development of local new energy vehicles in recent years, domestic enterprises have achieved rapid growth in various segmented markets.

According to Omdia statistics, the top 3 global IGBT single tube and module companies in 2021 are overseas enterprises, with market shares of 53% and 56% respectively. Domestic enterprise Silan Microelectronics has a market share of 4% in the single tube market, while Star Semiconductor and CRRC Times have market shares of 3% and 2% in the module market, respectively. The China Academy of Commerce Industry Research predicts that with the deepening of domestic substitution, the localization rate is expected to rise to 32.9% in 2023.

Multiple data and analyses indicate that China's power semiconductors have gradually moved from low threshold applications such as industrial control and medium low voltage to high-voltage applications such as automobiles and energy storage. Along with the construction of the third-generation semiconductor material industry represented by silicon carbide, localization has deepened.

With the trend of longer range and shorter charging time of electric vehicles, silicon-based technology is gradually moving towards physical limits in terms of size, weight, and power efficiency. More and more manufacturers are turning to silicon carbide, especially the importance of silicon carbide in the application of new energy vehicle power systems is becoming increasingly prominent. With the acceleration of the "silicon carbide on board" process, the construction of the silicon carbide industry has also become one of the main themes for various companies to increase project investment this year.

According to incomplete statistics from Jiwei Network, the number of newly signed third-generation semiconductor (power projects) has nearly doubled in the first nine months of 2023 compared to the entire year of 2022.

JW Insights previously estimated that by 2026, the global market size of power devices in new energy vehicles will reach 85 billion yuan, and the global market size of SiC power semiconductors in new energy vehicles will approach 28 billion yuan, with a penetration rate of over 30%.

Currently, among the actively constructed silicon carbide projects in China, high investment projects have emerged. In addition to the Sanan Yifa 8-inch silicon carbide project signed in Chongqing in June, there is also the recently constructed Changfei Advanced Third Generation Semiconductor Power Device Base, which is expected to have a total investment of over 20 billion yuan. Among them, the total investment of the first phase of the project is 10 billion yuan, which can produce 360000 SiC MOSFET wafers annually, including epitaxy, device design, wafer manufacturing, packaging, etc. It is expected to be completed by 2025. Hubei Gongxin News pointed out that by then, the project will become the largest SiC power semiconductor manufacturing base in China, with a leading production capacity in the industry.

The scale of production capacity and technological leadership have become achievable goals for domestic enterprises after investment. Infineon once directly denied investors' doubts about Chinese suppliers during its Q3 conference call for fiscal year 2023, stating that the share of silicon carbide materials from Chinese suppliers reached around 20% in the past quarter, and this share will double in the coming quarters. We are pleased with the progress made by Tianyue Advanced and Tianke Heda

With the advancement of various domestic projects, the production capacity of power semiconductor related products in China is constantly increasing, and the completeness of the industrial chain is also constantly improving. It has formed a coverage of core links from material enterprises such as Tianyue Advanced and Tianke Heda, to equipment manufacturers such as Liancheng Kaix Technology, to manufacturers such as Jita Semiconductor, as well as product enterprises such as Times Electric, Star Semiconductor, and Xinyue Energy.