Cree says it will spend $1 billion over the next five years to boost its overall silicon carbide production amid escalating demand, particularly in China. Silicon carbide (SiC) is an emerging alternative to silicon used in power semiconductors to reduce the charging time and increase the range of electric vehicles. It's also used to enhance the efficiency of solar inverters, industrial motors and cellular infrastructure.
Cree plans to pump $450 million of the total investment to expand its silicon carbide production plant located in North Carolina's Research Triangle. The company said the North Fab will start 200mm production by 2024 and is designed to make automotive-grade chips. Cree said another $450 million of capital spending would be used to ramp up production of SiC materials, which it also sells to other semiconductor suppliers.
“We continue to see great interest from the automotive and communications infrastructure sectors to leverage the benefits of silicon carbide,” Gregg Lowe, Cree's chief exeuctive officer, said. “However, the demand for silicon carbide has long surpassed available supply.” SiC is a so-called wide bandgap semiconductor since it can tolerate higher heat, handle higher voltages, and deliver higher switching speeds than silicon.
“This investment in equipment, infrastructure and our workforce is capable of increasing our silicon carbide wafer fabrication capacity up to 30-fold and our materials production by up to 30-fold compared to the first quarter of fiscal year 2017," he said in a statement. Cree also produces gallium nitride—more commonly called GaN—another type of advanced semiconductor used in high-voltage, high-heat electronic devices.
The spending plan shows how aggressively Cree is beefing up its semiconductor business. Last year, the company spent $430 million to purchase Infineon’s RF power semiconductor unit, moving it further into the market for cellular infrastructure solutions. In March, the company sold its lighting business for $310 million as part of its strategy to become a more streamlined supplier of SiC and GaN chips.
Silicon carbide chip sales are projected to jump from $615 million in 2019 to $1.58 billion in 2023 as the cost of discrete chips falls and other challenges are resolved, according to Yole Développement power electronics analyst Milan Rosina. Sales of SiC and GaN components used in electric car powertrain inverters could surge to $10 billion by 2027, said Richard Eden, power semiconductor analyst at IHS Markit.