Led by Tesla, EVs drive chip industry's shift beyond silicon

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Led by Tesla, EVs drive chip industry's shift beyond silicon
Model 3's use of new material spurs competition for energy-efficient alternative

Smaller inverters, a key EV component, helped give Tesla's Model 3 its sleek design. Silicon carbide contributes to making smaller power components.

HIDEAKI RYUGEN, ZHANG YAOYU and NAOKI WATANABE, Nikkei staff writersSeptember 6, 2021 05:56 JST

TOKYO/OSAKA -- Abundant, easily processed silicon has been the material of choice for decades in the semiconductor industry, but electric vehicles are helping chip away at its dominance in the pursuit of energy efficiency.

Tesla has been a catalyst for this change. The U.S. automaker became the first of its peers to use silicon carbide chips in a mass-produced car, incorporating them into some of its Model 3s. This move gave the power-saving material a boost of momentum in the EV supply chain, with ramifications for the chip industry.

"Thus far, chipmakers have worked together to build up the silicon carbide market, but we've reached the stage of competing with each other," said Kazuhide Ino, chief strategy officer at Japanese chipmaker Rohm.

Silicon carbide, abbreviated SiC, contains silicon and carbon. With chemical bonds stronger than those in silicon, it is the world's third-hardest substance. Processing it requires advanced technology, but the material's stability and other properties let chipmakers cut energy loss by more than half compared with standard silicon wafers.

SiC chips also dissipate heat well, allowing for smaller inverters -- a crucial EV component that regulates the flow of power to the motor.

"The Model 3 has an air resistance factor as low as a sports car's," said Masayoshi Yamamoto, a professor at Nagoya University in Japan. "Scaling down inverters enabled its streamlined design."

A Tesla Model 3 inverter containing silicon carbide chips is seen during a teardown. (Photo courtesy of Nagoya University professor Masayoshi Yamamoto)

Tesla's move jolted the chip industry. In June, German chipmaker Infineon Technologies introduced an SiC module for electric vehicle inverters.

"The timing of the expansion of SiC has clearly moved closer than what we had expected," said Takemi Kouzu, manager at Infineon's Japan unit.

Hyundai Motor will use Infineon-made SiC chips in its next-generation EV. These chips are said to enable a more than 5% increase in vehicle range compared with silicon.

French automaker Renault signed a deal in June with Switzerland-based STMicroelectronics for a supply of SiC chips beginning in 2026. The agreement also covers chips made with gallium nitride, another alternative material for semiconductor wafers.

The market for SiC power chips will grow sixfold by 2026 compared with 2020, reaching $4.48 billion, French market research firm Yole Developpement forecasts.

The price gap between silicon and more costly SiC is narrowing. Mass production and other factors have shrunk the difference in cost to about double, from roughly tenfold as recently as five years ago, Yamamoto said. With some chip industry suppliers starting to make bigger SiC wafers, this gap could narrow even further.

Rohm has been a leader in the field, mass-producing the world's first SiC transistor in 2010. German unit SiCrystal, acquired in 2009, makes SiC wafers, giving Rohm a start-to-finish production capability. The Japanese company aims to reach a 30% global market share in SiC chips by fiscal 2025. It recently opened a additional production facility at a plant in Japan's Fukuoka Prefecture, part of plans to grow capacity more than fivefold.

Rohm said a number of upcoming electric vehicle models will use its SiC chips. It also has an agreement with Chinese EV maker Geely on technology for next-generation chips.

Silicon was not the first chip material. After the groundbreaking invention of the transistor at Bell Laboratories in the U.S. in 1947, germanium crystals were used. Silicon replaced this element in the 1960s as the semiconductor industry took off. Two of the world's biggest silicon wafer suppliers -- Shin-Etsu Chemical and Sumco -- are based in Japan.

SiC also has rivals as an alternative to silicon. Gallium nitride (GaN) holds the potential to cut energy loss to about one-tenth as much as with silicon chips. The use of this material in semiconductors was developed in Japan to create blue light-emitting diodes. While GaN chips are used in some areas, such as charging devices, the material has yet to show its full potential because it has mostly been used in conjunction with other materials, including silicon.

The search for alternatives to silicon reflects the increasingly apparent limits to improvement in chip performance. The development of smaller, more powerful electronics requires etching ever more minute circuit patterns. With this scale now at 5 nanometers (1 nanometer equals one billionth of a meter), the projection that transistor density will double roughly every two years -- known as Moore's Law -- is being tested like never before.

Energy conservation also drives innovations in chip materials. The expansion of EVs, data centers and other building blocks of the digital economy will create vast unmet demand for electricity without steps to improve energy efficiency.

U.S. startup Lab 91, a spinoff of the University of Texas at Austin, is developing technology to overlay graphene -- sheets of carbon just one atom thick -- on chip wafers. Early trials have been successful, and the company is in talks with chipmakers on evaluating the technology for mass production. Graphene holds the potential to improve chip performance in a wide range of applications, from EVs to LEDs to image sensors used in smartphone cameras.

Diamond -- called by some the ultimate semiconductor -- is a potentially game-changing but costly alternative to silicon. Tokyo-based manufacturer Adamant Namiki Precision Jewel has developed technology for producing power chips with diamond. The world's hardest substance has a theoretical ability to cut energy loss to one-50,000th as much as silicon. But making such chips cost-effective will be key. Diamond substrates now cost thousands of times as much as silicon wafers.

With semiconductors vital to national security and economic competitiveness, governments in China, the U.S. and Europe are looking to back research and development into new chip materials. Support for R&D and investment in this field was part of a semiconductor strategy issued by Japan's Ministry of Economy, Trade and Industry in June. As silicon stood alongside steel as one of the materials that built the 20th century, the next great semiconductor material looks likely to become a driver of international competition in the coming decades.

https://asia.nikkei.com/Business/Te...Vs-drive-chip-industry-s-shift-beyond-silicon

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Chip shortage could last until 2023
06-09-2021 | | By Sam Brown

The global chip shortage has sent shockwaves through all industries, which may not be resolved until 2023. What caused this crisis, how are current chip stockpiles looking, and could the response see a fall in the price of future semiconductors?



What caused the shortage of integrated circuits?
The electronics industry faces a significant semiconductor crisis with extremely reduced stocks, long lead times, and difficulty meeting the surging demand. Of all crises to ever hit the semiconductor industry, the current shortage is arguably the worse in history, with a full recovery expected to now take years.

The cause of the current crises has its roots in the COVID-19 pandemic of 2020, but not in the way one would expect. Global lockdowns of non-essential services and industries saw many confined to their homes, but those involved with essential services such as food and semiconductor production continued to operate. If anything, the demand for semiconductors in computing saw a sharp rise due to the many millions working from home who all wanted new computers, laptops, tablets, and office equipment.

However, the automotive industry practically ground to a halt, and the lack of car sales combined with less spending saw many car manufacturers suspend all operations. This suspension of car production was noticed by semiconductor companies as the demand for automotive-grade parts entirely disappeared. Therefore, semiconductor manufacturers stopped producing automotive-grade parts.

When automotive manufacturers went back into production, they realised that there were no more automotive-grade parts available, and the lead time on such parts can be up to a year. Thus, semiconductor manufacturers panicked and started to produce automotive-grade parts again while using up foundry time for other commercial semiconductor devices. Now, the world is seeing a game of cat and mouse where semiconductors are in shortage as the industry attempts to control semiconductor supplies.

What is the current status of the chip shortage?


This problem was reported at the beginning of 2021, with an estimated 6 months to see new parts leaving foundries. However, it is now August 2021, and there are no signs that the chip crisis is improving.

Recently, German IC producer Infineon said that chip shortages in crucial areas could persist right up to 2023. Infineon further mentioned that current production rates are around 20% short for the cellular industry and 10% for other sectors. While this may not seem like much, it must be considered that large businesses will often buy up entire supplies leaving none for others (just like how toilet paper randomly became a rare commodity at the beginning of the pandemic).

The chip shortage troubles can also be seen in the share prices of semiconductor companies. As news of shortages worsens, stock prices for semiconductor companies increase as the high demand will see guaranteed sales and allow for price increases. This increase in income will also enable semiconductor companies to research and expand their facilities to help create the next generation of devices. ASE Technology (based in Taiwan) has also stated that the semiconductor shortage could last well into 2022 as the industry recovers from the pandemic and rapidly changing demand.



Will this see a reduction in semiconductor prices in the future?


The global chip shortage is seeing semiconductor companies rush to increase their production capabilities. This is being realised by both pushing out priority devices first and the construction of new semiconductor foundries. The desire to construct new foundries is also being fuelled by increasingly harsh restrictions on trade with China and its products to gain semiconductor independence.

Once supplies return to normal, the industry will be left with an excessive production capability which will undoubtedly be utilised along with large stockpiles of chips for all sectors. As such, the price of semiconductors could drop sharply in the years following 2023, assuming that old stockpiles are still relevant and the excessive production capabilities of foundries cannot be used on next-generation hardware.

https://www.electropages.com/blog/2021/09/chip-shortage-could-last-until-2023



Raw materials crisis
Ford Europe’s Herrmann, meanwhile, estimates the chip shortage could continue through to 2024, adding that it’s difficult to pinpoint exactly when it will end.

The shortage is thought to have been exacerbated by the move to electric vehicles. For example, a Ford Focus typically uses roughly 300 chips, whereas one of Ford’s new electric vehicles can have up to 3,000 chips.

Beyond chips, there are now other shortages to contend with. Ford is facing a “new crisis” in raw materials, Herrmann said.

“It’s not only semiconductors,” he said, adding that lithium, plastics and steel are all in relatively short supply. “You find shortages or constraints all over the place.”
Car prices will rise as the cost of raw materials goes up, Herrmann said.
Despite the imbalances, Herrmann said Ford Europe’s incoming order bank was “fantastic” and that “demand is actually extremely strong.”

No longer fit for purpose
Daimler’s Kallenius said he hopes the third quarter is the “trough” of the disruptions. “That seems to be the quarter that will be most significantly affected by this,” he said.
“We hope that in the fourth quarter that we will start coming back up again,” Kallenius said. “But there is a level of uncertainty that we have to deal with in our production system. It needs to stay flexible.”

The chip shortage has affected the automotive industry more than any other. Assembly lines have been shut down and some cars are now being shipped without features that rely on semiconductors.

In the U.K., car production plummeted to a new low in July, marking the worst July performance for the industry since 1956.

German technology and engineering group Bosch, which is the world’s largest car-parts supplier, believes semiconductor supply chains in the automotive industry are no longer fit for purpose.
Harald Kroeger, a member of the Bosch management board, told CNBC last month that supply chains have buckled in the last year as demand for chips in everything from cars to PlayStation 5s and electric toothbrushes has surged worldwide.


https://www.cnbc.com/2021/09/06/vw-ford-daimler-fear-chip-shortage-could-persist-for-some-time.html

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