Another question is whether the supply chain is ready to embrace the market acceleration, because wafer supply is one of the bottlenecks. The short SiC wafer supply situation has been in place since late 2016. Last year, the Yole analysts heard complaints. Some expected the situation to be resolved in the second half of 2017. But we are in the middle of 2018 and the supply issue remains. Two main reasons account for the current situation. First, the transition from 4 inch to 6 inch wafers is much faster than suppliers expected. Second, the wafer demand increase is also faster than expected.
Will the situation continue? Some say that it is temporary and quite normal and typically happens when shifting to larger wafer sizes. Others consider the situation to be critical. It’s a good problem for wafer suppliers as the supply constrained situation allows them to maintain high wafer prices. But they are also investing heavily to satisfy demand from numerous clients. We estimate that several hundred million US dollars will be invested in coming years. The leading SiC wafer suppliers (Cree/Wolfspeed, SiCrystal/Rohm Semiconductor, II-VI and Dow) are all investing to expand their capacity.
At the epiwafer level, the market has struggled to take off for several years, but the situation is evolving quickly. For example, Yole has seen Showa Denko expand its capacity consecutively in 2015, 2016 and 2018 as the technology becomes more mature and the outsourcing ratio is increasing.
A fast-evolving market is seeing plenty of activity from its participants, with several important events in 2017 and 2018. In Feb 2018, Cree announced a 180° turnaround in its strategy on its investor day, after the abortive sale of its Wolfspeed business to Infineon. The company decided to instead focus on Wolfspeed which, despite being Cree’s smallest business, is the market leader in both the SiC wafer and SiC power device markets as of 2017. This strategy pivot will allow Cree to invest more into its SiC activities, expanding wafer, epiwafer and device capacity and prepare for market growth. On the other side of the abortive acquisition, Infineon has also developed its SiC power business. The company signed a long term SiC wafer supply agreement with Cree and began to actively promote its CoolSiC MOSFETs at different power electronic tradeshows and conferences in 2018.
A foundry model is clearly forming which facilitates fabless and fab-lite companies to launch SiC products and make the technology more accessible. But there was also short supply of foundry services in 2017. A new 6 inch wafer foundry, Clas-SiC Wafer Fab Limited was founded in 2017, with the entire SiC team from Raytheon, which has stopped its SiC activities. The Taiwanese foundry Episil is also now active.