Several chip companies, including ON Semiconductor and ST Microelectronics, experienced a continued drop in stock prices on the New York Stock Exchange after Tesla, a major US electric vehicle manufacturer, announced its plan to reduce the use of silicon carbide transistors in its new electric vehicles’ powertrains.
According to data from the US Institute of Electrical Engineering, silicon carbide transistors are widely used in the electric vehicle industry because of their better heat resistance, longer service life, and higher power efficiency compared to chips made by silicon power transistors.
During Tesla’s Investor Day 2023 held in Austin, Texas on March 1, Colin Campbell, Tesla’s chief engineer for powertrain production, revealed the company’s plans to reduce the cost of producing electric powertrains in its vehicles while maintaining a high level of potential and driving efficiency.
As a result, ON Semiconductor, ST Microelectronics, and Wolfspeed experienced a significant drop in stock prices as investors expressed concerns that Tesla’s move may prompt other automakers to follow suit.
This announcement came at a time when the chip industry is already grappling with supply chain challenges and a shortage of semiconductor components. Tesla’s decision to move away from silicon carbide transistors may have further implications for the industry’s supply and demand dynamics, affecting the global chip market.