Coherent Silicon Carbide (SiC) is a Key Mirror Material for Astronomical Telescopes and Power Electronics for Electric Vehicles

Silicon carbide’s hard and rigid surface properties make it an excellent mirror material for astronomical telescopes, and also form a key part of power electronics in terrestrial electric vehicles and spacecraft probes.

Khan notes that DENSO and Mitsubishi Electric are two leading system companies actively procuring SiC chips on both substrate and epiwafer levels.

What is Coherent?

Silicon carbide, along with exotic semiconductor materials like gallium nitride and gallium oxide, has recently made headlines due to their potential to replace traditional silicon in some applications like power electronics for electric vehicles. This trend is being propelled by lucrative opportunities presented by green technologies like electric vehicles, solar panels and advanced sensors that must perform under harsh environments.

Companies looking to take advantage of the surging demand for power electronic devices must have access to large quantities of high-grade silicon carbide (SiC) wafers. American company Coherent, previously known as II-VI but now manufacturing lasers and switches for circuits, plans on capitalizing on this trend by creating a subsidiary dedicated solely to SiC wafer production.

Recently, the company announced it had secured a combined investment of $1 billion from Japanese firms DENSO and Mitsubishi Electric for its silicon carbide (SiC) semiconductor business. This investment will speed up capital plans in coming years as it supports expanded manufacturing capacity of 150mm and 200mm SiC substrates and epitaxial wafers.

Coherent’s investment comes at a time when market estimates indicate the total addressable market for SiC will reach approximately $21 billion by 2030, prompting Coherent to scale its manufacturing operations of substrates and epitaxial wafers manufactured using this material to meet this increasing demand, expanding Coherent’s global leadership position in SiC technology in tandem with these operations.

SiC chips have attracted much interest due to their superior efficiency, as evidenced by the fact they only lose half as much energy to heat as silicon-based chips do. This enables power electronics components to operate at lower temperatures while saving costs and weight; plus wasting less heat means batteries last longer!

Another factor is that SiC semiconductors are made from stronger and more abrasion-resistant material than silicon, helping extend their operating lifespan. Due to these and other reasons, manufacturers of power electronics have eagerly adopted SiC. As a result, firms such as Wolfspeed announced in summer 2018 that it was building the world’s largest SiC fab facility while Infineon announced plans for developing their own plant.

Applications

SiC is widely used in semiconductor electronics applications due to its excellent thermal conductivity, hardness, and rigidity – properties which make it ideal for high temperatures and voltages. SiC’s superior thermal conductivity enables large power conversion applications like inverters and drivetrains for electric vehicles as well as power transmission systems that use its low electrical resistance which helps reduce heat loss while improving efficiency. Likewise, SiC technology is being utilized by Herschel and Gaia space observatories due to its low thermal expansion coefficient; mirrors made of SiC can even reach dimensions up to 3.5 meters (11 feet).

Coherent’s silicon carbide business has garnered interest from three Japanese conglomerates – Denso Corp, Hitachi Ltd and Mitsubishi Electric Corp – with each conglomerate considering investing in it at up to $5 billion valuation, according to a source familiar with the matter who asked not to be identified because the matter was considered confidential.

As global demand for electric vehicles surges, their demand is skyrocketing as well. To meet increasing driving range, reduce battery costs and curb emissions effectively, power converters based on silicon carbide (SiC) are expected to become widely adopted starting around 2025 in high-end EVs before spreading throughout cars and industrial power applications.

As well as producing SiC substrates, this subsidiary has expanded into devices and modules production. Khan believes the key to their success lies with working alongside leading system companies such as Mitsubishi Electric and Denso to gain maximum learning from collaboration, thus improving production processes.

This company seeks to produce 200mm n-type 4H SiC substrates suitable for manufacturing high-performance SiC power MOSFETs with superior voltage and temperature resistance and reliability, performance and lifetime compared to traditional silicon chips. SiC MOSFETs provide power electronics systems which must operate at higher frequencies, temperatures, wider power ranges and at reduced costs – ideal solutions that help reduce CO2 emissions while hastening the transition towards clean energy solutions.

Technology

Silicon carbide (SiC) is an extremely hard and brittle crystal material used in semiconductor electronics devices that operate under high temperatures or voltages, and an excellent conductor of electricity at room temperature. SiC can withstand extremely high temperatures or voltages and is an outstanding conductor of electricity at room temperature; as such it finds application in light-emitting diodes (LEDs), detectors in early radios, power converters (such as those found in electric vehicles), light emitting diodes (LEDs), and power converters in early radios – with all types of applications found within semiconductor electronics devices using SiC. Natural moissanite is mined only in very limited amounts while virtually all SiC sold commercially is synthetically manufactured from raw material found.

Chips made of silicon carbide can bring several advantages over their silicon counterparts in power electronics applications, including lower operating temperatures and switching frequencies. Recently, Coherent made headlines for establishing its subsidiary dedicated solely to silicon carbide production – following in the footsteps of Wolfspeed who built Germany’s largest silicon carbide factory and Infineon Technologies who make semiconductor devices.

Coherent’s silicon carbide business has expanded exponentially since its founding, producing large wafers for manufacturing high-performance power devices. Lines to handle substrates up to 200mm in diameter have been established, and tools have been qualified for use during this process. Furthermore, an epitaxial wafer manufacturing subsidiary also serves as the starting point for fabricating an array of power semiconductor devices.

To maximize yield and reduce costs, the subsidiary has taken to adopting the Lely process, in which silicon carbide powder is sublimed into higher temperature species of SiC such as silicon nitride (SiN) and silicon dicarbide (Si2C). The Lely method permits for single crystal growth with high purity which are then cut to create epitaxial wafers for individual epitaxial wafers – it may be more costly than chemical vapor deposition but considered essential in producing reliable yet cost-cutting silicon carbide semiconductor devices.

The subsidiary has signed long-term supply agreements with DENSO and Mitsubishi Electric, who use SiC substrates and epitaxial wafers produced by our subsidiary for manufacturing power converters in electric cars. Under these contracts, 150mm and 200mm SiC substrates will be purchased to support their respective power electronics needs.

Pricing

Coherent COHR, +4.52% shares surged on Tuesday following news that its silicon carbide semiconductor business will receive $1 billion from Japanese automakers Denso 6902, -1.07% and Mitsubishi Electric 6503 -0.68% will each invest $500 million for 12.5% non-controlling stakes; Pittsburgh-based Coherent owns 75%.

Coherent’s investment will accelerate capital expansion plans and enable long-term supply agreements. Furthermore, this transaction enables Coherent to become a merchant player engaging with customers at all levels of value chain from manufacturing SiC substrates and epireactors through to device and module design and production. Sohail Khan, senior EVP for new ventures and widebandgap electronics business will lead its new subsidiary as CEO.

As a result of its investment, legacy Coherent’s communications segment accounted for around 65% of total revenues during fiscal 2018; due to this investment it is anticipated that their business will achieve a revenue run rate of more than $2 billion and profit margin of greater than 15% by fiscal 2023, according to Fitch ratings. This represents an impressive boost over its contributions of approximately $650 million annually in revenues during fiscal 2018.

Silicon carbide is an exotic compound found in small quantities only in certain meteorite and corundum deposits and the gem moissanite. Due to its special properties, silicon carbide has become an integral component in high-temperature electronics and power electronics applications; being capable of withstanding higher temperatures and voltages than silicon while conducting electricity more efficiently than aluminum or steel. Furthermore, silicon carbide is considerably lighter and stronger than its aluminum and steel counterparts.

Coherent has invested significantly in its business over the past two years to enhance capacity and support its continued expansion, including building a 300 mm wafer production line as well as investing in epi-wafer processing equipment and R&D research and development capabilities. Coherent now supplies SiC wafers in both 200 and 400mm diameters to various customers worldwide.

Fitch anticipates that the growth in silicon carbide business, coupled with cost efficiencies from Coherent acquisition will help offset weakness in other segments, leading to EBITDA interest coverage at levels closer to typical “BB” levels during outlook period.