By Kate Yuan

(JW Insights) Jul 26 -- More and more Mergers and acquisitions are taking place in the SiC (Silicon Carbide) field both in the global and China market.

Recently, ROHM Semiconductor announced its acquisition of Solar Frontier's former factory assets to expand SiC production capacity. ON Semiconductor acquired GT Advanced Technologies for $415 million in 2021.

M&As are also occurring in China's SiC industry. In 2022, over 26 SiC companies raised more than RMB1.6 billion ($223.59 million). In the first half of 2023, the amount surged to over RMB8.5 billion ($1.19 billion) in more than 25 SiC companies, setting a new record. They cover epitaxy, substrate, devices, and equipment, according to a report by JW Insights.

These M&As are closely related to the growing prospects of the green and low-carbon concept. Shi Yin, a researcher at the Chinese Academy of Sciences Semiconductor Institute, said SiC has become popular in the new energy, power, and electronics market in recent years. The technology and capital barriers for power devices are much lower than those for silicon-based chips. So many companies are expanding their SiC production lines.

Investment experts predict that in the next 3-5 years, it is highly possible that SiC M&As will keep at three to four cases each year. SiC has a wide range of applications in energy storage and new energy vehicles, with ensured potential growth.

Ding Guojiao, director of Field Application Management at Avnet, emphasized that in addition to EV, SiC has the potential to be applied in any high-power and high-voltage scenarios, such as hydrogen energy vehicle DC-DC converters, high-speed rails, high-voltage flexible transmission, and charging piles.

“Furthermore, with the development of artificial intelligence, there is a growing demand for high-speed computing in cloud and edge computing, data centers, and other high-power and highly efficient power systems, which will also provide many opportunities for SiC,” Ding added.

“The competition in SiC is still in its infancy in China, and many companies have chosen SiC as a new direction or are expanding SiC production lines,” Shi Yin pointed out. Chinese companies should not miss this opportunity and should fully leverage the benefits of M&As to get ahead.

In fact, such cases had occurred as early as 2016 when An Xin Capital acquired Swedish SiC substrate company Norstel, and then Xiamen-based Sanan Optoelectronics acquired it from An Xin in 2020. This allowed Sanan to successfully extend its business scope from SiC devices to SiC crystal growth and substrate manufacturing.

Although the cases are still rare in China, large-scale mergers and reorganizations are inevitable in the future as more capital and companies enter this field.

Inspired by international cases, some Chinese experts suggest that exploring end-to-end industrial model is a way for Chinese SiC companies to effectively implement M&As. Many international companies have covered businesses from the upstream substrate materials to downstream device modules, such as ROHM's acquisition of SiCrystal's equity as well as its recent acquisition of Solar Frontier.

M&As in a specific industry chain segment can help domestic companies quickly improve their competitiveness. In the SiC equipment field, large international companies can offer multiple types of equipment covering a variety of customer needs for the same process chain in a specific market segment. Most Chinese companies can only provide one kind currently, according to the JW Insights article.