Wolfspeed silicon carbide plant for electric vehicle manufacturers
Hello and welcome to Protocol Enterprise! Today: Why EV makers are watching silicon carbide chip development closely, the economic downturn could be coming for tech startups, and the side effects of the aggressive strategy to keep the Chinese out of chips advancements.
Put the silicon in the carbide
A bulletproof material called silicon carbide will likely be a key component in making electric vehicles a global reality. Chips forged with the tough-to-work compound can help extend cars’ range and make fast charging dramatically more efficient.
Oolfspeed is betting $5 billion that silicon carbide is that future. The company on Friday announced plans to build a new plant in North Carolina that will boost the company’s manufacturing capacity tenfold.
- Unlike the silicon wafers used by Intel and TSMC, Wolfspeed grows silicon carbide ingots and cuts them into wafer-sized pieces.
- The material is difficult to work with and requires furnaces burning at 4,500 degrees Fahrenheit to grow the ingots.
- Wolfspeed declined to discuss how it cuts the ingots, but cutting the silicon carbide wafers is a difficult enough problem that Taiwan – which is interested in producing chips for electric vehicles – has set up a fund to development in Lithuania.
- Lithuania has developed laser technology that promises to be very effective in slicing silicon carbide ingots, according to Eric Huang, head of the Taiwan representative office in Lithuania.
Wafer manufacturing is only the beginning of the problem. Because silicon carbide is so hard and heat resistant, Wolfspeed and other manufacturers had to adapt the manufacturing process.
- Quality control is one of the main issues, Oreste Donzella, executive vice president of electronics, packaging and components at KLA, said at a recent investor conference.
- KLA is a leader in critical defect detection technology used by chipmakers worldwide to improve yields.
- “It is very difficult to control the silicon carbide substrate, the quality cell. We have therefore developed many solutions [at] KLA to ensure that we are properly inspecting and measuring the silicon carbide wafer at the substrate level,” Donzella said, according to a Sentieo transcript.
- Other processes, such as the etching part of chip production, also need to be redesigned to improve the performance of the resulting device.
Tesla already uses silicon carbide to transmit the energy stored in a vehicle’s battery to the motors that turn the wheels, and many of the biggest automakers are expected to follow suit.
- Wolfspeed has signed an agreement to supply chips to GMas it transitions its fleet to electric, and CEO Gregg Lowe said he expects the rest of the industry to follow suit soon enough.
- The inverter component in which they are used is a crucial bottleneck, and the use of more energy-efficient chips can result in a 5-15% increase in a vehicle’s range.
- Donzella didn’t give an exact figure, but said KLA’s automotive revenue has nearly tripled since 2019, given the company’s current forecast for the year.
— Max A. Cherney (E-mail | Twitter)
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RIP good times
As the economy forces companies to consider slowing hiring, layoffs and other cost-cutting measures in addition to lowering expectations, enterprise-focused tech startups are feeling the heat.
“By extension, this is going to come back and impact startups in terms of the growth rates they’re going to see and what their primary goals will be,” said S. Somasegar (“Soma”), managing director of Seattle-based Madrona Venture Group, which invests in Pacific Northwest tech startups. “We’ve already seen some of the portfolio companies only adjust their revenue growth for next year.”
The venture capital landscape is also changing. And with some companies take a step back and slowing down their investments, Soma has some advice for entrepreneurs focused on client companies.
“You should be asking yourself, ‘How do I make sure I have enough funds to have a long enough lead for me to make the progress that I can?’ Soma told Protocol in a recent interview, “The second is to ask, ‘How do I envision effective growth, not just growth at any cost?’ Keep the unit economy in mind.
According to Soma, one of the benefits of current market conditions is the impact on “crazy” corporate valuations.
“Corporate valuations are returning to a more rational level,” he said. “You’re starting to see that over the last eight months in the public market, and I would say over the last six months in the private market, where valuations are getting a little more reasonable.”
— Donna Goodison (E-mail | Twitter)
Old GPUs for Chinese AI?
The fallout from new US export restrictions preventing AI chipmakers from selling in China may not affect a young AI software startup seeking the US market, or even its China-based chief technology officer. China.
But it could affect some people using its software.
“It will have a big impact on researchers and engineers in China,” Yang You, founder of AI optimization startup HPC-AI Tech, told me from his home in Singapore this week.
“Nvidia GPUs in China will be older than Nvidia GPUs in the US. Basically, they’re using a worse product,” You said.
HPC-AI Tech manufactures software called Colossal-IA. The company behind the open-source tool, which streamlines the process of training computationally intensive deep neural networks to make it faster, cheaper and more efficient, recently secured funding from Kai-Fu Lee’s venture capital firm Sinovation Ventures. The company obtained a cheers from nvidia in July.
Registered in Delaware and Singapore, HPC-AI Tech’s CTO is based in China and the company has an office in Beijing.
You said the next chip supply cut won’t affect his business because the software works with any type of GPU. But with a global open source community, Colossal-AI users in China could feel it.
Now, You said he expects the US blockade to kick GPU investment into China into high gear.
“Chinese GPU companies will get more funding,” You told me. “And in the next few years, maybe these big GPU users like Tencent, Alibaba will want to develop their own chips. They may have this motivation.
“Alibaba, ByteDance – they’re basically global companies. They can build data centers in Malaysia, Singapore — [outside] from China. Maybe they have this kind of plan,” You said.
It’s already starting. Alibaba said last year it would build its own server chips based on technology licensed from Arm. ByteDance is also reportedly worked on its own chip-building efforts.
-Kate Kaye (E-mail | Twitter)
Around the company
Intel held an inauguration ceremony on the future site from its chip factory in Ohio, which included participants such as President Biden.
Pendo laid off 5% of its employees in what seems to be another case of a SaaS company assuming the pandemic spending boom was the new normal.
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Thanks for reading – see you Monday!