Power Semiconductors

Infineon secures SiC chip deal with Hyundai, Kia

20 October 2023
A silicon carbide semiconductor wafer in the final stages of production. SiC chips have become highly popular with the demand for EVs and renewable energy sources growing. Major deals like Infineon and Hyundai and Kia are becoming commonplace. Source: STMicroelectronics

In another major deal for silicon carbide (SiC) semiconductors, Infineon Technologies AG has secured a multi-year supply agreement with automotive OEMs Hyundai Motor Company and Kia Corp.

The deal also covers a supply of silicon power semiconductors to the car makers.

SiC semiconductors are in extremely high demand. Why? They are being used by the automotive sector in what is being billed as the largest transition in history to electric vehicles (EVs). However, SiC and other power semiconductors are also being heavily used in green energy like solar, wind and more.

Under the deal with Hyundai and Kia, Infineon will build and reserve manufacturing capacity to supply SiC and silicon power modules to the automakers until 2030. Kia and Hyundai will in turn support the capacity build-up and capacity reservation with financial contributions, Infineon said.

Ramping capacity

Infineon’s goal is to increase its SiC market share to 30% by the end of the decade. To do this, the company is making significant moves to compete.

This includes a significant investment into a 200 mm SiC fab in Kulim, Malaysia. Over the next five years, Infineon will invest up to $5.5 billion in the fab. Originally, Infineon announced a minor expansion to the facility last year, however, due to the rapid demand for power semiconductors in the automotive and renewable energy markets, a much larger expansion was greenlit.

Infineon said the investment in the Kulim fab would secure revenue of potentially $7 billion by the end of the decade.

Additionally, Infineon is also converting its Villach, Austria, fab into a 200 mm SiC facility for further capacity and expanding its Dresden, Germany, fab as well to further improve capacity for power chips.

Infineon has secured design wins for power chips from six OEMs in the automotive sector with three coming from China. These include Ford, SAIC and Chery. In renewables, SolarEdge and three Chinese photovoltaic and energy storage system companies are part of the design wins. Additionally, Schneider Electric has agreed on capacity reservation including prepayments for power products based on silicon and SiC.

SiC roaring

Mega deals for silicon carbide and other power semiconductors are becoming a common occurrence as chipmakers, automakers and energy companies are looking to secure capacity for the next big thing in their sectors.

The automotive power market — power MOSFETs, IGBT and SiC semiconductors — is set to reach revenues of $26.6 billion by 2030, according to market research firm TechInsights. This is nearly double the revenue it will generate this year at $12.6 billion. In the next five-year period, the power chip market for automotive is forecast to manage a compound annual growth rate (CAGR) of 16.0%. And this doesn’t even include the demand happening in renewables.

Because of this, big deals for big bucks are happening in return for guaranteed supply of power semiconductors for several years as EVs become the dominant engine globally and renewable energy grabs a further foothold.

One such deal may be coming for U.S. materials supplier Coherent Corp. which has the attention of four Japanese conglomerates looking to secure their own supply with a minority stake. Coherent has plans to invest about $1 billion over the next 10 years to expand its production of SiC wafers. This financial burden may be alleviated with the company accepting one of these companies as an investor for a value of between $4 billion and $5 billion.

Another major deal just happened this summer as Renesas Electronic and Wolfspeed agreed to a wafer supply deal to secure support for silicon carbide bar and epitaxial wafers for the next 10 years. The $2 billion deal will see Wolfspeed scale production of the power semiconductors beginning in 2025.

Additionally, this summer Vitesco Technologies signed an agreement with Onsemi to help Vitesco secure access to SiC capacity to ramp up its electrification technologies used in EVs. Onsemi said it will invest an additional $2 billion to boost production of SiC chips either at its Czech Republic, U.S. or South Korean facilities.

To contact the author of this article, email PBrown@globalspec.com

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