Why automakers and suppliers are scrambling for silicon carbide microchips for EVs

Automakers and suppliers have been scrambling to secure supplies of silicon carbide semiconductors, which promise faster battery charging times and improved ranges on electric vehicles.

The industry may be experiencing a slowdown in EV sales growth as questions about long-term electrification targets mount, but silicon carbide chips could help to address the concerns of EV-skeptical consumers.

Supplier giant Robert Bosch estimates the new technology could extend battery range by as much as 6 percent while cutting down on charging times.

The chips are only one of the many ways auto companies are looking to allay those concerns, and the new chips are currently more expensive than the standard silicon chips in common automotive use today. But the market for silicon carbide chips is expected to grow rapidly.

An October 2023 report by McKinsey and Co. forecasts that global demand for silicon carbide across industries will grow to between $11 billion and $14 billion by 2030, up from around $2 billion today, with 70 percent of that growth driven by EVs.

Today's supply is relatively limited, driving North American auto companies to secure supply contracts now collectively worth billions of dollars — or in some cases, to build or buy their own facilities.

The U.S. government is backing silicon carbide projects, as seen most recently with a $544 million Department of Energy loan to South Korean manufacturer SK Siltron for a massive silicon carbide facility in Michigan.

For automotive purposes, silicon carbide chips are primarily used in EV powertrains, inverters, DC-DC converters and on-board chargers, according to McKinsey.

They offer "higher switching frequency, thermal resistance and breakdown voltage," resulting in longer vehicle ranges and increased efficiency, McKinsey said. Gains are more pronounced in higher-voltage battery EVs than in lower-voltage EV powertrains, with 800-volt BEV powertrains likely to use more silicon carbide inverters in the future.

Much of the current market for the chips is dominated by just a couple companies. According to McKinsey, North Carolina's Wolfspeed accounted for 53 percent of the market for silicon carbide wafers in 2022, with California's Coherent accounting for another 20 percent. Meanwhile, STMicroelectronics and Infineon combined to account for 54 percent of the market for silicon carbide-related devices.

Other major players in the space include Rohm Semiconductor, SK Siltron and Onsemi, all of which have announced major manufacturing investments or significant new supply deals.

Even traditional automotive players are getting in on the game.

German supplier ZF Group said last year it will partner with Wolfspeed on a new production facility for silicon carbide chips that will be the world's largest when it opens in 2027. Meanwhile, Bosch, the world's largest parts supplier, bought chip maker TSI Semiconductors in Roseville, Calif., in 2023 and plans to spend $1.5 billion to upgrade the facility for silicon carbide chip production by 2026.

Several major automakers and suppliers announced silicon carbide supply deals in recent months. Those companies include:

• German powertrain supplier Vitesco Technologies, which signed long-term supply deals with Onsemi and Rohm in 2023, each worth more than $1 billion.
• Hyundai and Kia, which signed a multiyear sourcing deal with Infineon that secures manufacturing capacity for the automakers until 2030.
• Japanese suppliers Denso and Mitsubishi Electric, which in October agreed to invest $1 billion in exchange for a quarter of Coherent Corp.'s silicon carbide business.

At least one major silicon carbide producer has secured a conditional commitment for a major government loan. The Department of Energy in February agreed to lend $544 million to SK Siltron CSS, a subsidiary of South Korean tech conglomerate SK Group, to support the expansion of its silicon carbide semiconductor wafer plant in Michigan. The funding will help it become one of the world's five largest producers of silicon carbide wafers, according to the Department of Energy's Loan Programs Office.

The loan will "enable larger growth and expanded capacity than originally projected," an SK spokesperson told Automotive News.