Chongqing, China: STMicroelectronics (NYSE: STM), a global semiconductor leader, and Sanan Optoelectronics, a prominent player in compound semiconductors in China, have signed an agreement to form a new joint venture (JV) focused on manufacturing silicon carbide (SiC) devices.
The JV aims to meet the growing demand for SiC devices in China’s automotive electrification, industrial power, and energy applications. Additionally, Sanan Optoelectronics will construct and operate a separate SiC substrate manufacturing facility to support the JV’s needs using its own SiC substrate process.
The new SiC fabrication facility, to be located in Chongqing, China, is scheduled to commence production in the fourth quarter of 2025, with full buildout expected by 2028.
It will exclusively manufacture SiC devices for STMicroelectronics, utilizing ST’s proprietary SiC manufacturing process technology. The facility will serve as a dedicated foundry for ST, catering to the demands of its Chinese customers.
The total investment for the full buildout of the JV is estimated to be around $3.2 billion, including approximately $2.4 billion in capital expenditures over the next five years.
The financing for the project will be sourced from contributions by STMicroelectronics and Sanan Optoelectronics, local government support, and loans to the JV.
China’s rapid shift towards automotive and industrial electrification presents significant market opportunities. By establishing a dedicated foundry in partnership with a local key player, STMicroelectronics aims to efficiently serve the rising demand from Chinese customers.
The collaboration between Sanan Optoelectronics’ forthcoming 200mm SiC substrate manufacturing facility, the front-end JV, and ST’s existing back-end facility in Shenzhen, China will enable ST to provide its Chinese customers with a fully vertically integrated SiC value chain.
Jean-Marc Chery, President and CEO of STMicroelectronics, commented, “This joint venture represents a crucial milestone in meeting the growing demand for SiC devices in the Chinese market. By partnering with a leading local company, we can efficiently serve our Chinese customers while leveraging Sanan Optoelectronics’ future SiC substrate manufacturing facility. This initiative aligns with our goal of scaling up our global SiC manufacturing operations and our ambition to achieve over $5 billion in SiC revenues by 2030.”
Simon Lin, CEO of Sanan Optoelectronics, expressed enthusiasm about the joint venture, stating, “The establishment of this JV will be a significant driving force for the widespread adoption of SiC devices in the Chinese market. As an internationally recognized SiC foundry service company, Sanan will also supply SiC substrates to the new joint venture through the construction of a dedicated SiC substrate factory. This marks an important step for Sanan Optoelectronics in its ambitions as a SiC foundry, allowing us to maintain our leadership in the SiC foundry market.”
The completion of the project is subject to regulatory approvals. Once operational, the SiC device manufacturing JV and the expanded SiC substrate capacity are expected to enhance STMicroelectronics’ position in the SiC market, aligning with the company’s revenue ambitions and its commitment to the financial markets.
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