Core Viewpoint - JS Foundry, a Japanese wafer foundry, filed for bankruptcy after failed negotiations for SiC technology collaboration, despite initial government support and a brief operational history [1][2][3]. Group 1: Company Background - JS Foundry was established in 2022 and operates a 41-year-old wafer plant previously owned by Sanyo and later by ON Semiconductor [3]. - The company had a revenue of $68 million in its first operational year, a significant increase from $17.6 million the previous year [3]. - JS Foundry has a debt of $110 million and employed 550 staff members [3][4]. Group 2: Market Context - The power semiconductor market is facing challenges due to a slowdown in electric vehicle sales and increased competition from China [4]. - Notable competitors, such as Wolfspeed, have also filed for bankruptcy, and Renesas Electronics has abandoned plans to start SiC production later this year [4]. Group 3: Government Support and Investment - The Japanese central government and Niigata Prefecture planned to provide subsidies worth billions of yen for equipment investment in JS Foundry [4]. - The company was co-founded by Mercuria Investment and Sangyo Sosei Advisory, backed by the Development Bank of Japan [3][4].

Core Viewpoint - The power semiconductor market is deteriorating, leading to continuous capital outflow, exemplified by JS Foundry's bankruptcy filing due to challenges in customer acquisition and financial difficulties caused by the rise of Chinese competitors [1][2]. Group 1: Company Overview - JS Foundry, established in December 2022 with investments from the Japan Policy Investment Bank and others, has a total debt of 16.1 billion yen and employs approximately 550 people, with around 200 outsourced to other companies [1]. - The company acquired its Niigata factory from ON Semiconductor in 2022, which was originally built in 1984 by Sanyo Electric [2]. Group 2: Financial Performance - JS Foundry's revenue has significantly declined from approximately 10 billion yen at its inception to an expected 2.6 billion yen in the fiscal year ending December 2024 [2]. - The company had anticipated growth driven by electric vehicle demand, but this growth has not materialized as expected, leading to a worsening market situation starting in the second half of 2023 [2]. Group 3: Industry Context - The rise of Chinese power semiconductor manufacturers has hindered JS Foundry's ability to develop new customers, contributing to its financial struggles [1][2]. - Other companies in the power semiconductor sector, such as Wolfspeed and Rohm, are also facing significant challenges, with Wolfspeed filing for Chapter 11 bankruptcy and Rohm expecting its first net loss in 11 years due to investments in this sector [2].

Core Viewpoint - The development of China's SiC (Silicon Carbide) power semiconductor industry reflects a common path for Chinese semiconductor companies, focusing on IDM (Integrated Device Manufacturer) models to break through barriers, leveraging cost advantages to capture market share, and using capital endurance to gain technological time windows. Despite short-term pains such as losses and price wars, the long-term value is evident as the penetration of SiC in the renewable energy sector continues to rise, positioning leading Chinese SiC companies to dominate the global industry chain restructuring [1][24]. Group 1: Industry Milestones - The strategic adaptation of the Hong Kong Stock Exchange's Chapter 18C rules facilitates the listing of specialized technology companies, easing profitability requirements and emphasizing technological barriers and commercialization potential. Chinese SiC companies have achieved full-scale production across the entire SiC IDM value chain [6]. - Revenue for Chinese SiC power semiconductor companies is projected to grow significantly, with a CAGR of 59.9% from 2022 to 2024, while R&D investment exceeds 30% of revenue, indicating a focus on capacity expansion despite initial losses [8]. - The gross margin for Chinese SiC companies is improving, with the loss rate narrowing from -48.6% in 2022 to -9.7% in 2024, reflecting initial scale effects and cost optimization in automotive-grade modules [8]. Group 2: Capacity and Market Penetration - The capacity utilization rates for Chinese SiC packaging plants are low, with only 52.6% in Wuxi and 45.2% in Shenzhen, yet companies plan to invest 620 million yuan to expand facilities, highlighting a competitive logic of "capacity first" to seize automotive orders [9]. - Chinese SiC companies hold 163 patents and 122 applications, with core products certified for automotive standards, achieving reliability benchmarks comparable to international standards [17]. - The IDM model adopted by Chinese SiC companies integrates design, manufacturing, and testing, reducing supply chain risks and accelerating product iteration, with significant design wins across multiple automotive models [18]. Group 3: Downstream Drivers and Domestic Substitution - The global demand for SiC is heavily driven by the electric vehicle sector, which accounts for 70% of the market, with Chinese companies leveraging cost advantages to capture market share from foreign competitors [19]. - The share of Chinese SiC power modules is expected to increase significantly, especially in the context of market restructuring following the bankruptcy of Wolfspeed, allowing local manufacturers to fill mid-range market gaps [19]. Group 4: Future Trends - The capital-driven technological iteration is evident in the ongoing R&D and expansion of 8-inch wafer production, reflecting market expectations for a technological turning point [21]. - Leading Chinese SiC companies are evolving from single-device offerings to integrated solutions that include modules, driver ICs, and simulation services, thereby lowering design barriers for customers [22]. - To address tariff barriers, Chinese companies are establishing localized supply chains through acquisitions in Europe and setting up manufacturing centers in Southeast Asia, creating a "localized + globalized" supply chain strategy [23].