Originally Published: April 19th 2023
Silicon carbide (SiC) has long been a key material in the electric vehicle (EV) revolution, offering exceptional efficiency and reduced energy loss. Tesla, for instance, set a high bar with its use of SiC MOSFETs in the inverters of its Model 3, enhancing performance significantly. However, SiC’s high cost and limited supply have historically limited its adoption—until China’s recent surge in this sector.
Rediscovering an Industry Turning Point
We recently dug up an insightful article from the archives that sheds light on a pivotal moment in the SiC industry’s evolution. Published at the height of China’s rapid ascent in SiC production, it highlighted key developments that have had lasting impacts on the EV and semiconductor industries—and perhaps even influenced the recent downturn in Wolfspeed (WOLF) stock.
China’s Silicon Carbide Surge
China’s advancements in SiC production marked a turning point. Previously, Wolfspeed dominated the global SiC market, holding about 60% of the substrate supply. But Chinese manufacturers quickly disrupted this dominance. By employing specialized division of labor and scaling up investments in cutting-edge 8-inch SiC substrate production lines—more cost-effective than the traditional 6-inch versions—Chinese companies managed to significantly boost production capacity while slashing costs.
These developments have had far-reaching consequences, reducing barriers to entry for SiC technology and enabling wider adoption by EV manufacturers.
Diverging SiC Strategies in the EV Space
While Tesla aimed to cut its SiC usage per vehicle by 75% to reduce costs, Chinese EV manufacturers leaned into the growing availability of SiC. Bolstered by a robust domestic supply chain, they embraced the material to produce high-performance, competitively priced vehicles. A standout example is Xiaomi’s SU7 model, which incorporates a substantial number of SiC MOSFETs, pushing the boundaries of cost and performance optimization.
The Fallout: Lessons Learned and Market Shifts
The article’s insights provide context for the recent struggles of Wolfspeed (WOLF). Once an undisputed leader, the company faced intense competition as China’s rapid expansion in SiC production drove down prices and eroded Wolfspeed’s market share. Investors may have underestimated just how quickly Chinese manufacturers could scale and innovate in this space.
Looking Ahead
This rediscovered article offers a compelling narrative of how China’s SiC industry reshaped the global landscape. Its lessons remain relevant as EV manufacturers and semiconductor players navigate an increasingly competitive and cost-sensitive market.
Source: Futunn News
Note: This article was resurfaced from the archives to provide context on the evolving SiC market and its impact on Wolfspeed’s stock performance.
