"Star Daily" September 18th News (Reporter Wu Xuguang) At today's (September 18th) earnings conference for the first half of 2024, Zong Yanmin, the chairman and general manager of Tianyue Advanced, expressed optimism about the production capacity and future prospects of the company's 8-inch silicon carbide substrate products.

In terms of market development direction, Zong Yanmin stated that the current market is mainly based on 6-inch wafers, while silicon carbide wafers are moving towards 8-inch wafers, which is a law of development in the semiconductor industry. "In the next few years, with technological progress, 8-inch silicon carbide will gradually increase in volume."

"From a cost reduction perspective, in the long run, 8-inch wafers will help silicon carbide devices achieve large-scale commercialization in more application areas, driving the silicon carbide market into a new development stage. Currently, the company is at the forefront of the industry in 8-inch silicon carbide substrates, has the capability for large-scale production, and plans to further expand the production capacity of 8-inch silicon carbide substrates at the Lingang plant," Zong Yanmin added.

Earlier this year, there were reports in the market that the prices of mainstream 6-inch silicon carbide (SiC) substrates in China were rapidly dropping, with prices approaching 750-800 US dollars per piece, a drop of nearly 30%.

During the earnings conference, an investor asked Tianyue Advanced: "Is there further room for price reduction for traditional silicon carbide substrate products such as 4-inch and 6-inch?"

Zong Yanmin stated that the price of silicon carbide substrates will decrease, partly due to the push of substrate cost reduction by technological improvement and economies of scale; on the other hand, the current price of silicon carbide substrates is higher than that of silicon substrates, and the price reduction will help expand downstream applications, promoting a wider penetration of silicon carbide.

"Similar to other semiconductor materials, currently, leading domestic and international companies will comprehensively consider pricing strategies based on market conditions, their own products, specific customers, and other factors, and some new entrants will also gain market share through price reductions, which is in line with the development trend of the industry," Zong Yanmin further stated.

Regarding the measures that the company will take to further optimize costs in the future, Tianyue Advanced stated during a research on institutional investors in late August this year that, on one hand, it will increase technology research and development and layout in cutting-edge technologies, conducting intensive experiments in core technology areas such as crystal growth and defect control, continuously breaking through technological bottlenecks, improving product yield, and continuously reducing preparation costs; On the other hand, it will continuously improve production capacity and output, and promote the reduction of substrate costs through economies of scale.

The "Science and Technology Innovation Board Daily" noticed that in addition to expanding production capacity, the production yield of silicon carbide substrates is also of significant importance, which to some extent determines the cost optimization of products and contributes to the increase in silicon carbide penetration rate. However, silicon carbide substrate manufacturers are not willing to disclose too much information about the yield rate.

In response to investors' question about how the company plans to improve production efficiency in the future, Tianyue Advanced stated that production efficiency improvement is on one hand about the crystal growth stage, and on the other hand about the processing stage. "The company is continuously improving in both areas. In the processing stage, the company is continuously increasing research and development investment, including the layout of cutting-edge technologies such as laser cutting."

In terms of capacity expansion, on the evening of July 8th this year, Tianyue Advanced announced that it plans to raise 0.3 billion RMB through private placement to invest in the improvement project of 8-inch car-grade silicon carbide substrate preparation technology.

During the earnings conference, when asked about the latest progress of the fundraising project, the company secretary of Tianyue Advanced, Zhong Wenqing, stated that the issuance of shares to specific entities for the fundraising project in 2024 is progressing according to the procedures, but there is still uncertainty. The company will plan refinancing arrangements based on capital expenditure.

In addition, regarding the demand for silicon carbide substrates, personnel from the securities department of Tianyue Advanced stated that after the 8-inch products are verified by customers, most customers choose to upgrade to 8-inch. "The larger the size, the lower the unit chip cost."

An industry insider engaged in semiconductor industry research informed a reporter from the "Science and Technology Innovation Board Daily" that 8-inch silicon carbide substrates have comprehensive cost advantages. Although the preparation cost increases, the production yield of qualified chips increases significantly. For downstream customers, promoting the upgrade from 6-inch to 8-inch is one of the important cost reduction paths.

In recent years, thanks to the continuous penetration of silicon carbide semiconductor materials in new energy vehicles, wind power storage, and other application fields, the expansion of Tianyue Advanced's silicon carbide substrates in the field of new energy vehicles has become one of the main downstream application scenarios.

At the earnings conference, Zhong Wenqing, the board secretary of Tianyue Advanced, said that silicon carbide has many advantages. It can improve performance while increasing the battery's range and reducing charging time. Therefore, it has already begun to be used on a large scale in new energy vehicles. Especially in models with an 800V high-voltage platform, the advantages of silicon carbide technology are evident. With the decrease in the cost of silicon carbide, the penetration rate of its usage will continue to increase in various fields.