From sapphire to SiC: GTAT deal highlights wafer consolidation

Feature articles | August 26, 2021

By Nick Flaherty

Onsemi is paying under twice GTAT’s estimated annual revenue of $244m to acquire a key part of the supply chain for SiC devivces. The onsemi share price ticked up in trading after the deal, indicating the market didn’t think onsemi had over-paid.

The move is part of onsemi’s focus on the supply chain for electric vehicles. “We don’t break out the SiC business but its fuelling a lot of growth, not just in electric vehicles but charging and infrastructure. Our long term agreements are starting to ramp and will ramp further next year. I’m bullish from the long term engagements we have with customers,” said Hassane El-Khoury, the new CEO speaking to analysts last week (above, right).

onsemi says it plans to invest in expanding GTAT’s research and development efforts to advance 150mm and 200mm SiC crystal growth technology, while also investing in the broader SiC supply chain, including fab capacity and packaging as it brings the GTAT staff into the company.

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GTAT has had a chequered past, which is perhaps why it has not been a target for acquisition previously. It emerged from bankruptcy protection in 2016 following a collapsed deal with Apple for sapphire material for iPhone screens. From there, it moved into the emerging silicon carbide market, but sanctions from the Apple deal took until 2019 to be applied.

The deal continues the consolidation, particularly in Europe. Norstel in Sweden was acquired by ST Microelectronics to enhance its in-house wafer capability, while II-VI bought another Swedish firm, Ascatron, to support its move into the SiC market. SiCrystal in Germany started producing commercial SiC wafers in 1997 and merged with Siemens-owned SiC-supplier Freitronics Wafer three years later. It was bought by Rohm of Japan in 2010 as an early move into the technology and is a key supplier to STMicroelectronics. The move of former ST executive Bob Kyrisiak to the board of GTAT showed the close links.

The leading SiC wafer producer, Cree, is also investing $1bn on expanding its capacity for both wafers and chips.

The opportunity for SiC in electric vehicles has also attracted new entrants. Apple’s contract manufacturer Foxconn has been moving into making electric cars, and the company intends to use the memory fab it is buying from Macronix to make SiC chips.

Next: Consolidation challenge for Infineon

Consolidation also holds risks for other companies. Infineon signed a five year supply agreement with GTAT in November 2020, alongside Cree and Showa Denko as suppliers. Relying on a direct competitor for supply of key wafers will create a headache for the company. Infineon already has experience of this, as it tried to buy the Wolfspeed SiC business from Cree in 2016

“We are seeing a steadily increasing demand for SiC-based switches, especially for industrial applications,” said Peter Wawer, President of Infineon’s Industrial Power Control Division. “However, it has become clear that the automotive sector is quickly following suit. With the supply agreement we have now concluded, we ensure that we will be able to meet the rapidly growing demand of our customers with a diversified supplier base. GTAT’s high-quality boules will provide an additional source for competitive SiC wafers fulfilling the best-in-class material standards now and in the future. This supports our ambitious SiC growth plans, making good use of our existing in-house technologies and core competencies in thin-wafer manufacturing.”

Quite how that plays out in the light of the GTA acquisition rmains to be seen.

www.gtat.com; www.onsemi.com

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