Sanan Optoelectronics issued an announcement that Hunan Sanan, its subsidiary, signed a procurement letter of intent (LOI) agreement with a strategic automotive partner. According to the agreement, Hunan Sanan will supply silicon carbide ("SiC") chips to the automaker's electric vehicle ("NEV") product line in the next few years, totaling $524 million USD.
Tony Chiang, General Manager of Hunan Sanan, said, "Our agreement with this strategic partner further demonstrates the automotive industry's commitment to providing innovative electrification experience to the market and leveraging the advantages of wide bandgap semiconductors to improve overall vehicle performance. The agreement ensures a long-term supply of SiC to our customer to help them realize their promise of low-carbon, smart mobility. "
The SiC chips in the agreement will be manufactured in the Hunan Sanan's mega fab in Changsha, the first vertically integrated SiC wafer manufacturing service platform in China, providing in-house supply chain from SiC crystal, substrate, epitaxy, chip manufacturing, packaging, and testing, with a committed annual production capacity of 500,000 SiC 6-inch wafers. Hunan Sanan has recently obtained IATF 16949 system certification while the automotive-grade SiC MOSFETs have been verified with the cooperation of strategic partners, and are expected to be released in production in 2024. Sike Semiconductor, a company jointly established by Hunan Sanan and Li Auto, also officially started construction this past August and is expected to start production in 2024 with a planned annual production capacity of 2.4 million half-bridge SiC power modules.
As an industry standard compound semiconductor in the automotive era, SiC chips are widely used in transportation, enabling higher system efficiency and provide strong support of rapid adoption by the automotive industry to low-carbon, intelligent mobility. According to a market report by YoleDevelopment, the SiC power device market will surge from $1 billion in 2021 to $6.3 billion in 2027, driven by the NEV market. However, due to the gap between the high demand of NEV's and the expansion of SiC substrate manufacturing, the supply of silicon carbide chips will be in a shortage in the short term. Automakers have started partnering with strategic upstream suppliers for their chips to ensure that NEV manufacturing can continue to secure critical components.
Hunan Sanan's SiC technology will provide energy for the NEV power system for medium and high voltage platforms, and will empower the high voltage analog IC supply chain to create a low-carbon intelligent vehicle experience and help achieve a green energy lifestyle.