The Third Generation Semiconductor Led The Rise: Hot Investment And Surging Industrial Chain Expansion

The third generation semiconductor is a hot word in semiconductor circle in recent two years. As Tesla Model 3 inverter is gradually replaced by silicon carbide devices, and domestic mobile phone brands use gallium nitride charger, the application scale of the third generation semiconductor is accelerating growth, and it is further favored by the capital market.

On June 17, the third generation semiconductor concept led the rise in the capital market. As of the end of the day, the wind third generation semiconductor index was up 10.83%, jucan optoelectronics stock price was up 20.01%, China Resources micro was up 19.13%, and Yangjie technology was up 12.68%. The trading limits of Sanan optoelectronics, Qianzhao optoelectronics and North Huachuang were up.

From 2018 to 2020, the third generation semiconductor industry has been affected by Sino US trade frictions, epidemic situation, etc., and the overall market growth momentum is insufficient, resulting in the continuous suppression of growth. The growth momentum of the third generation semiconductor is expected to pick up at a high speed in 2021 due to the demand for automobiles, industry and communication. Among them, gallium nitride power devices have the most obvious growth strength. It is estimated that the market size of gallium nitride power devices will reach 61 million US dollars this year, with an annual growth rate of 90.6%.

New infrastructure promotes demand explosion

Although this field is called the third generation semiconductor by the public, it actually refers to the renewal of the material level. It is not a substitute relationship with the first and second generation semiconductors, but complementary. They have different characteristics and different uses.

Specifically, the first generation semiconductor materials are mainly silicon (SI) and germanium (GE), which are the main materials used in CPU processor and other integrated circuits; The second generation semiconductors include gallium arsenide (GaAs), indium phosphide (INP), and so on.

The third generation semiconductor materials are mainly silicon carbide (SIC), gallium nitride (GAN), zinc oxide (ZnO), diamond, aluminum nitride (AlN) as the representative of wide band gap semiconductor materials. It has advantages in communication, automobile, high-speed rail, satellite communication, aerospace and other application scenarios. Among them, the research and development of SiC and Gan are more mature.

At present, the popularity of the third generation semiconductor is mainly driven by two forces. The first is the demand for application scenarios, especially under the promotion of new domestic infrastructure, 5g communication, new energy vehicles, aerospace and other fields have become new growth points, and the use of new materials has entered a new explosion period. However, it should be pointed out that the third generation semiconductor is not a revolutionary subversive technology, but it has a huge application market space.

Second, it is urgent to build a self owned semiconductor industry chain. However, for devices using the third generation semiconductor, the mass production process is not advanced process. Therefore, the bottleneck of "neck sticking" is small and it is easier to break through. Moreover, China has more opportunities to keep pace with foreign enterprises, which is also regarded as an opportunity for China's semiconductor industry to break through. Some industry insiders have pointed out to the 21st century economic reporter that the advanced process of the second generation semiconductors requires high material complexity and purity. Relatively speaking, the third generation semiconductors are easier to break through in materials and face smaller ecological challenges.

According to the statistical data of the third generation semiconductor industry development report (2020), in 2020, the overall output value of the third generation semiconductor in China will exceed 710 billion, in which power electronics and microwave radio frequency will continue to grow.

In terms of power electronic applications, driven by the application of new energy vehicles, the market scale of domestic silicon carbide and gallium nitride power electronic devices in 2020 will increase by 90% compared with the previous year. At the same time, in 2020, the PD fast charging market will break out. Domestic mobile phone manufacturers and e-commerce companies will launch dozens of gallium nitride fast charging products. Meanwhile, pen phone manufacturers will also enter.

In RF application, 5g base station construction is the key driving force. In 2020, the three major operators announced the completion of 800000 5g base stations, driving the domestic market demand for GaN microwave RF devices to increase by 57.2% over the previous year.

In terms of optoelectronic applications, mini led scale commercial applications have been launched, and will enter the family scene in the future; The key technologies of micro led continue to break through, but it will take time for large-scale industrial application; The outbreak of Xinguan has created a driving force for the UV LED industry, and the average annual compound growth rate is expected to reach 41% during the 14th Five Year Plan period.

There are more than 100 domestic enterprises

Driven by the market, domestic enterprises have strengthened the layout of the third generation semiconductor and expanded their production, such as Tianke heta, Tongguang crystal, Navitas technology, Tyco Tianrun, CETC 55 Institute, and San'an optoelectronics.

In terms of capacity supply, the wafer plants are also expanding production. Jibang pointed out that the supply of 6-inch wafers is tight due to the use of this substrate in communication and power fields. It is estimated that the revenue of SiC devices in the power field will reach 680 million US dollars in 2021, with an annual increase of 32%. At present, major substrate manufacturers such as Cree, II-VI and STM have successively launched 8-inch substrate development plans, but it is still expected to ease the supply dilemma after 2022.

At the same time, traditional semiconductor enterprises are also actively deploying third-generation semiconductors, such as China Resources micro, Wentai technology, star semiconductor, BYD, SAIC microelectronics, etc.

According to the incomplete statistics of Asia Chemical consulting, in recent years, there are more than 100 enterprises in the third-generation semiconductor industry in China, and nearly five third-generation semiconductor related projects signed in May 2021.

The reporter learned from semiconductor investors that the valuations of some third-generation semiconductor projects that we have seen are basically very high. However, from the perspective of business volume, they are not particularly matched with the valuation. Therefore, we will also take into consideration that there are some institutions that have been deployed early, such as the deployment started 4-5 years ago, which still has good returns.

Although the third generation semiconductor has attractive potential, it is still in the early stage of development. A person in the chip design industry told the 21st century economic reporter that it will take time for the third generation semiconductor to mature and commercialize. At present, we have not seen the whole industrial chain including design turning to the third generation semiconductor, which involves the production cost and price of the whole industry, Commercialization requires process.

According to the data from yole, a market research organization, Cree | wolfspeed, Rohm, Infineon, Mitsubishi and St together account for 80% of the market share of SiC Power Semiconductors, while EPC, transphorm, Gan system and Infineon together occupy 90% of the market share of Gan power semiconductors, while Sumitomo Electric Co., Ltd Cree | wolfspeed and qorvo together account for 85% of Gan RF market share. Compared with foreign enterprises, there is still a gap in China, and the level of localization is low, there is a low level of repeated construction.

On the other hand, China is also constantly innovating in technology and industrial chain. Taking gallium nitride related patents as an example, according to the smart bud data, the total number of applications for the third generation semiconductor gallium nitride related patents in the world is 157439, of which 41730 are applied in China, ranking first.

On the whole, the third generation semiconductor replaces part of the power devices, and whether it can occupy more shares in the integrated circuit industry still needs to observe the market demand and the further development of the industrial chain.