By Scott Kanowsky
Investing.com -- Shares in European and U.S. chipmakers slipped on Thursday after electric car manufacturer Tesla (NASDAQ:TSLA) noted during its latest investor day that it is using less silicon carbide wafers.
Switzerland-based STMicroelectronics N.V. (EPA:STM), a parts supplier to Tesla, dropped by more than 8% in its largest intraday fall since May. Rival Infineon Technologies AG (ETR:IFXGn), as well as semiconductor firm Aixtron SE (ETR:AIXGn), also dropped.
In the U.S., Wolfspeed (NYSE:WOLF) fell 10%, and ON Semiconductor (NASDAQ:ON) fell 6%.
At an event at its factory in Texas on Wednesday, Tesla vice president for Powertrain Engineering, Colin Campbell, said the company has developed in-house innovations that help it extract more heat from its custom transistor packages. Campbell added that the process uses three-fourths less silicon carbide without sacrificing the overall efficiency of the vehicle.
"Silicon carbide is an amazing semiconductor, but it's also expensive and it's really hard to scale. So using less of it is a big win for us," he said.
In response to the comments, a spokesperson for STMicro confirmed to Bloomberg News that it still expects to generate more than $1 billion in revenue from silicon carbide this year, up from $700M in 2022.
Analysts at Citi argued that Tesla's update is likely to be a long-term risk for silicon carbide chipmakers, particularly STMicro, where these sales are expected to be key growth drivers over the next decade.
"[The] headlines should pressure shares, although much is still to be understood," the Citi analysts said.
Commenting on Wolfspeed, Roth/MKM analysts said while the Tesla comments could weigh on the stock, "there is a good chance claims might not materialize, or the whole industry benefits."
"The manufacturing equipment Tesla uses for sintering MOSFETS to converter boards is available to all buyers, and open knowledge among automotive and SiC chip industry executives," the analysts said. "Any major step function change in packaging efficiency would benefit the entire SiC industry, so we expect a long-term benefit to direct TSLA SiC suppliers Wolfspeed, On Semi (ONN-NC), and ST Micro (STM-NC). We do not yet have detailed knowledge of the packaging tech claimed."
(Updated - March 2, 2023 9:21 AM EST)