Xinlian's Silicon Carbide Output to Double, Aims for $1B Annual Revenue

Silicon carbide (SiC) components are one of the core products that determine the performance of new energy vehicles and wind-solar-storage energy businesses. Executives of Xilian Integration-U (688469.SH), a wafer foundry listed company, told reporters from Yicai that in the second half of 2024, the company's shipments of SiC products are expected to increase from the current 5,000 to 6,000 pieces per month to 10,000 pieces, with corresponding revenue expected to exceed 1 billion yuan.

Starting from the second half of 2023, 800V high-voltage supercharging has been increasingly applied in the Chinese new energy vehicle circle, pushing this "star material" to the forefront.

"Why is silicon carbide so popular now? Because its energy conversion efficiency is 6% to 7% higher than that of silicon-based materials, which is equivalent to saving 6% to 7% of electricity, or extending the driving range of vehicles, making its electricity usage more efficient," explained Zhao Qi, the founder and CEO of Xilian Integration. In addition, for new energy vehicles, silicon carbide is also an essential component for vehicle switches and battery motor conversion.

Since 2023, the demand for new energy vehicles in China has remained strong, with significant increases in production and sales. According to data released by the China Association of Automobile Manufacturers, in the first quarter of 2024, vehicle production and sales increased by 81.7% and 75.6% year-on-year, respectively. The booming new energy vehicle market has driven the production and sales of silicon carbide products.

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Data provided by Xilian Integration shows that the company's vehicle power module installation volume in January-April achieved a year-on-year growth of more than 7 times. According to the NE Times' statistics on the new energy passenger car power module installation volume in January-April 2024, the company's power module installation volume exceeded 320,000 in January-April, ranking fourth among new energy passenger car power module enterprises, with a year-on-year growth of over 757%.

Xilian Integration already has a 6-inch silicon carbide production line with a monthly production capacity of over 5,000 pieces, which is currently operating at full capacity.

The price of a single silicon carbide device is generally about 4 to 5 times that of a silicon device. If silicon carbide devices are widely adopted, costs must continue to be optimized, and the current industry goal is to reduce the cost of silicon carbide devices to 2.5 times or even 2 times that of silicon devices.

A good path to achieve production advantages and cost optimization for silicon carbide devices is to transfer chip manufacturing from 6-inch to 8-inch wafers.

In April 2024, Xilian Integration's 8-inch silicon carbide engineering batch was successfully launched, making it the first 8-inch silicon carbide wafer factory in China to go into production, which will further optimize the system costs of downstream customers and accelerate the large-scale penetration of silicon carbide technology.

"The company's silicon carbide business revenue is expected to exceed 1 billion yuan in 2024. In the long term, the company's goal for the market share of its silicon carbide business is to reach 30% globally," said Zhao Qi.Like other integrated circuit manufacturers, Xilian Integrated Circuits is facing an increasingly competitive environment. According to the journalist's research, currently, several domestic companies have increased their investment in the research and development and production of automotive chips, aiming to gain a favorable position in key technological areas. CR Microelectronics is constructing a 12-inch specialty process integrated circuit production line in Shenzhen, which is expected to be operational by the end of 2024, with an annual production capacity of 480,000 power chips, mainly for new energy vehicles and other fields. Huatian Semiconductor's Wuxi subsidiary is expanding the capacity of its 12-inch wafer production line and has passed the automotive quality management system certification. YueXin Semiconductor's first and second phase projects have been put into operation, and the third phase project is expected to be operational in 2024, achieving a high-end analog chip manufacturing capacity of nearly 80,000 12-inch wafers per month.

Xilian Integrated Circuits is also actively expanding its mid-to-high-end product lines. "There will be no major investment in 8-inch, and the company's future expansion will be in 12-inch. The factory has already been built, and subsequent equipment construction will be added according to customer demand," said Zhao Qi. According to the plan, Xilian Integrated Circuits' 12-inch production capacity will increase from the current 30,000 pieces/month to 100,000 pieces/month, mainly for the production of MCU, HVIC, and IGBT devices. "Based on market demand, we will continue to expand production every year, but it will not be at the scale of around 10 billion per year as it was before 2023. Subsequent annual investments will be between 5 billion and 6 billion," he added.

In addition to new energy vehicles, Xilian Integrated Circuits is also laying out new tracks. The surge in AIGC has led to a dramatic increase in the demand for AI servers. According to Omdia statistics, the global server and computing center market size will reach 5 billion USD by 2027. The value of power management chips in AI servers is 3 to 10 times that of ordinary servers. Xilian Integrated Circuits claims that its power management chips are expected to break through the energy efficiency challenges of cloud servers. The company's power management chip platform technology has undergone two technological iterations. The first-generation platform has begun mass production, and the second-generation 55nm high-efficiency power management chip platform technology for data center servers is highly competitive. The company helps customers achieve "cost reduction and efficiency enhancement" by providing power management chips with smaller area, better efficiency, higher reliability, and greater flexibility.

At this stage, the company is fully promoting product import and market penetration, and this part of the business will become one of the important growth points of performance in the future. Xilian Integrated Circuits (formerly known as "Shaoxing SMIC") became an independent operation after being separated from SMIC's business in 2018. In May 2023, Shaoxing SMIC was listed on the STAR Market, and in November of the same year, "Shaoxing SMIC" was officially renamed "Xilian Integrated Circuits."