Renesas, a major Japanese semiconductor company, initially announced in mid-2023 that it would enter the SiC power device market through a 10-year partnership with the US wafer supplier Wolfspeed, including a $2 billion upfront deposit to secure 150mm and 200mm SiC wafers. The company aimed to start manufacturing SiC power chips for electric vehicles (EVs) at its Takasaki plant in Gunma Prefecture early in 2025.
However, due to multiple converging factors, Renesas has now decided to halt in-house SiC chip production and disbanded its SiC team at Takasaki.
Key Reasons for Abandonment
- Slowing EV Market Growth:
Global EV demand has slowed down, particularly in key markets like Europe due to subsidy cutbacks, impacting the growth trajectory of SiC power chip demand. - Chinese Price War and Supply Glut:
Chinese manufacturers, supported by government subsidies, have aggressively expanded SiC production. Vendors like TanKeBlue and SICC have captured over 34% combined global market share, driving a glut of supply. This has led to a 9% year-on-year decline in global SiC substrate revenue to about $1.04 billion in 2024 and falling prices, making profitability challenging for later entrants like Renesas. - Wolfspeed’s Financial Troubles:
Wolfspeed, Renesas’ SiC substrate and epiwafer supplier, is reportedly preparing for Chapter 11 bankruptcy. This jeopardizes Renesas’ $2 billion prepayment and supply security, adding financial and operational risk.
Market and Industry Impact
- Price Pressure and Increasing Competition: Chinese firms’ vertically integrated IDM models, aggressive pricing, and close ties to local automakers enhance their competitive edge, pressuring international rivals.
- Weakening Demand in Automotive and Industrial Sectors: Shipment growth for SiC substrates has slowed in 2024, and forecasts have been revised downward from early optimistic projections.
- Industry Restructuring: Alongside Renesas, other SiC players face tough times—ROHM reported its first net loss in 12 years partly due to SiC investments, STMicroelectronics shares dropped significantly, and Wolfspeed’s impending bankruptcy signals broader turbulence.
Despite abandoning in-house manufacturing plans, Renesas does not plan to exit the SiC market. Instead, the company intends to:
- Continue developing proprietary SiC device designs.
- Outsource chip manufacturing to foundries rather than direct production.
- Sell SiC power chips under its own brand leveraging outsourced production, attempting to mitigate capital risk and supply chain challenges.
The SiC power semiconductor sector is undergoing a deep transformation:
- The rise of Chinese suppliers and their IDM approach is reshaping global market shares and cost structures.
- Traditional Western and Japanese firms face difficulties in competing on cost and supply security.
- The global supply chain risks highlighted by Wolfspeed’s financial distress emphasize the strategic importance of vertical integration and diversified manufacturing capabilities.
Renesas’ decision to abandon direct SiC chip production reflects a difficult market environment dominated by slowing electric vehicle demand, intensified competition from well-supported Chinese manufacturers, and supply chain uncertainties due to Wolfspeed’s financial problems. The company aims to remain in the SiC market via design and outsourcing but has retreated from capital-intensive manufacturing plans. This signals a broader industrial shift toward Chinese leadership in SiC manufacturing and a challenging outlook for legacy players heavily reliant on external suppliers.
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