GT has the Technology and Know-how to Energize Tesla’s Lithium-Ion Gigafactory

Posted: March 8, 2014 by mattmargolis24 in GTAT Investor Information, My Publications, Sic (Silicon Carbide), Uncategorized
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GT has the Technology and Know-how to Energize Tesla’s Lithium-Ion Gigafactory – by Matt Margolis

GT Advanced Technologies changed their from GT Solar in August 2011.  Having spent significant amount of time examining the ins and outs of GT’s business I’ve learned a lot.  First off, the name “Advanced Technologies” couldn’t be closer to the truth, because GT’s technology is so far advanced compared to the competition.  I recently was asked, “what is GT’s next big product” and my response was “something we have never heard of”‘.  The reason I gave that kind of answer is because GT’s technological innovations are so far ahead of the products that will utilize those technologies.  However, I do believe the gap of technological innovation versus market adoption is beginning to close rapidly.  Tesla recently held discussions with Apple, which in part could be related to Tesla’s plan to open a Giga Factory to produce Lithium Ion batteries for motor vehicles and possibly electronic devices such as Apple’s suite of iDevices.  At this point it’s anyone’s guess, but it makes sense for Apple to team up with Tesla to improve battery life and user experience with their iDevices.

My fellow sleuths and friends (Chelle and Cali Sun/Chad X on SA) introduced the idea of a Tesla & GT partnership to
me several weeks ago and I owe them a tremendous thank you for their analysis and for opening my eyes to the possibilities.  I took what they started and did what I do best and I investigated.  Through my extensive research and unique approach and vital help from my fellow sleuths I’m going to paint a picture of why GT has the necessary ingredients to team up with Tesla sooner rather than later.

Thermal Technology Acquisition

GT made it clear almost two years ago that they were interested in getting into thermo electric converters for hybrid electric vehicles.  This interest was highlighted the press release when GT acquired Thermal Technology.

The company has also acquired Spark Plasma Sintering (SPS) technology, which allows dense ceramics to be obtained under uniform heating at relatively low temperatures and in short processing times. The SPS technology is expected to have a wide range of applications including with medical applications, sputtering targets, space applications and thermoelectric converters for hybrid electric cars.

One important item to highlight is Spark Plasma Sintering (SPS) technology, this wild machine turns ceramic powder into a dense crystalline material in less than 5 minutes versus other machines that take hours.   GT envisions using this technology to and their ceramic patent  (acquired through GT’s purchase of Twin Creek’s Technology) to create a thin semiconductor lamina adhered to a ceramic body.  The ceramic bodies would be formed using GT’s SPS technology.  The patent states that devices can be formed in the lamina, including photovoltaic devices. The ceramic body and lamina can withstand high processing temperatures. In some embodiments, the ceramic body may be conductive.  This ceramic patent also involves Hyperion to produce thin semiconductor lamina.

THE SPS PROCESS

Unique to SPS is the DC current generating heat internally, as opposed to conventional methods of materials densification such as hot pressing, wherein the heat is external to the sample. While other traditional methods of materials processing require hours to reach peak temperature, Thermal Technology’s SPS takes only minutes. The clear benefits of SPS are the significant savings of time and energy and the ability to retain nano-structures.

Screenshot - 3_9_2014 , 9_52_15 PM

An automotive thermoelectric generator (ATEG) is a device that converts waste heat in an internal combustion engine (IC) into electricity using the Seebeck Effect. A typical ATEG consists of four main elements: A hot-side heat exchanger, a cold-side heat exchanger, thermoelectric materials, and a compression assembly system. ATEGs can convert waste heat from an engine’s coolant or exhaust into electricity. A Thermoelectric converter in the simplest form can be found in this youtube video, as a glass of icy cold water and hot water power a fan.

The version that GT would use would be closely related to Solar power but instead of a solar cell it would use a Thermo Electric Converter Cell.  This technology appears difficult but the key to making this product work is ultra thin film which is something Hyperion and GT’s ceramic patent can deliver.
A Thermo Electric Converter cell is a device that converts heat to electricity.  The quest for such a device has been around for many years, and has resulted recently in many innovations, however there is not yet a machine that converts heat directly to electrical energy by using a chemical reaction.The problems are mostly that most chemical compounds do not react in a reversible way at temperatures below 100 degrees Celsius.There is a specific group of compounds that do react in a way that favours the phenomenon that Thermo Electric Converters employ to generate electricity.
Silicon Carbide – What is it and Why it’s Important
I found an interesting research paper on Silicon Carbide (SiC) and how this semi-conductor material is needed to replace Silicon (Si) because there is not much more benefits that can be found due to the limited performance benefits of Si versus Sic. SiC is a wide band-gap semiconductor and the benefits of using SiC in power electronics is tremendous.  The issue has always been the cost of processing and fabricating SiC material.    If you haven’t learned anything yet, then it’s time to start paying attention.  GT is the company with the best technology around and they know exactly how to cut cuts to drive technology adoption.
The superior properties of silicon carbide (SiC) powerelectronic devices compared with silicon (Si) are expected to have a significant impact on next-generation vehicles, especially hybrid electric vehicles (HEVs). Thesystem-level benefits of using SiC devices in HEVs include a large reduction in the size, weight, and cost of the power conditioning and/or thermal systems.
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GT has been eying the SiC industry opportunity for years.  The research paper on the topic was published in 2002 and it’s been nearly 12 years and to be honest the SiC industry appears ready to take off very soon.  Below are a few comments from GT over the past two years which indicates how significant the SiC industry is in terms of potential revenue as well as where they think they have an opportunity to grow the business (Power Electronics).    If you want to know specifically what area GT is targeting for Power Electronics then you just need to look at page 4 of their Corporate Overview.   The answer, is Power Systems for electric vehicles (see image below).

Screenshot - 3_9_2014 , 11_10_59 PM

I came across a comment on a message board and one of the astute posters noticed that the image on page 4 of GT’s Corporate Overview is also the same image as Tesla’s new Model S (image below).  It could be that GT has good taste in Tesla’s electric vehicles or possibly the two have had discussions already.  Either way, given Elon Musk’s goal to increase Tesla sales to 500,000 by 2020 from 25,000 in 2013, GT made the right call on the image for their Corporate Overview.

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GT Q2 2012

But an industry that could have even more growth is the cost of the silicon carbide wafers, for example, and other technology we’re to develop. And so we remain committed to obviously having a protected and strong position in the markets that we’re already in today, but at the same time, expanding into new verticals. And power semiconductors is the one that we’ve identified as our next area of significant focus.

GT Q4 2012
We have a sourcing chain and a logistics chain that’s enviable for producing equipment. That’s one piece of it. The other piece of it is, we actually have a substantial amount of GaN technology in-house. I mean, we — one of GT’s heritage is that it was involved in silicon carbide and GaN and a variety of other tools long ago, and we have a lot of PhD’s and a lot of people that are very familiar with the technology.
GT Q2 2013

Before turning the call over to Rick, I’d like to provide additional color on GT’s other diversification and growth initiatives. At the end of Q2, we released our first generation silicon carbide sublimation furnace. Design-in cycles for power devices are relatively long. And as such, we expect our silicon carbide business to ramp slowly. In the longer-term, the higher growth opportunity with silicon carbide for GT is in pairing it with our Hyperion technology in order to produce thin silicon carbide lamina at a fraction of the cost of what wafers cost today.

GT Q3 2013

Our silicon carbide initiative has been in progress for over a year. We have made excellent headway, and based on direct feedback from potential customers, it is clear that the market is looking for a full silicon carbide solution complete with process recipes. We believe that the differentiated process recipes that we are developing will provide a path to producing lower-cost silicon carbide. GT is on target to release a 4-inch solution in the first half of next year and to follow that up with a 6-inch solution by the end of 2014. We’re currently seeking strategic partners to support our silicon carbide development. Given the high cost of silicon carbide wafers, the real opportunity for silicon carbide remains in pairing it with Hyperion, which should enable thin wafer cost structures that are nearly an order of magnitude below today’s state-of-the-art wafering processes. Such an advance would significantly expand this opportunity for GT.

The Current SiC Power Electronics Market Adoption

As you can see below, SiC Power Electronics are just beginning to gain attraction across the auto mobile industry and the transportation industry including trains.  SiC power electronics are needed to improve fuel economy, by reducing weight and power consumption.  Mitsubishi Electric seems to be making the biggest strides in cornering the Sic power electronics end user marketplace.   You can tell from some the specific details that SiC has a tremendous impact on the size of the power electronics as well as the energy consumption.  Silicon Carbide (SiC) taking over for Silicon (Si) will be the next major revolution to lower the amount of energy consumption in electronic devices just like LED is doing for light bulbs all across the globe.

March 8, 2012 – Mitsubishi Electric Develops EV Motor System with Built-in Silicon Carbide Inverter

July 9, 2012 – Mitsubishi Electric to Begin Shipment of Silicon Carbide Power Module Samples.
December 27, 2013 – Mitsubishi Electric launching 3.3kV, 1500A inverter with all-SiC power module for high-power trains
Size and weight are reduced by about 65% compared to conventional inverter systems with IGBT power modules and about 30% compared to existing hybrid inverter systems with SiC diodes.
With help from Tokyo Metro Co Ltd, the system was field-tested in commercial railcars operating on its Ginza Line subway, demonstrating 38.6% energy reduction compared with conventional inverters in other railcars operating on the same line.
February 13, 2014 – Mitsubishi Electric announced today it has developed a prototype electric vehicle (EV) motor drive system with a built-in silicon-carbide inverter.
Tesla Motors $5B Lithium-Ion Gigafactory

Telsa announced a few weeks that it intends to spend $5B on a new plant to build batteries for its next-generation of electric vehicles.  Tesla’s goal is to build a plant that can produce enough batteries for 500,000 cars a year by 2020.  The 500,000 unit sales target has been around for since 2013.  For comparison, in 2013 Tesla sold just over 25,000 cars and driving up annual sales to 500,000 units is significant jump in sales and a lot of electric vehicle batteries compared to 2013 levels.    If Tesla really wants to improve the current batteries in the market today and they want to develop state-of-the-art lithium-ion batteries, then the key ingredient is graphene.  Northwestern University engineers in 2011 found that graphene electrodes can improve battery storage of lithium-ion batteries by 10 times and charge 10 times faster and last longer as well.  Tesla wants to improve the range of their vehicles and having a super charged lithium-ion battery featuring a graphene electrode will do the job and then some.

Engineers at Northwestern University have found that a specially-crafted graphene electrode can allow a lithium-ion battery to store 10 times as much power and charge 10 times faster — and last longer, too.

In state-of-the-art lithium-ion batteries there is a graphite anode, a metal oxide cathode, and an electrolyte containing a lithium salt. When discharging, lithium is forced out of the anode (+) and into the cathode (-), and during charging the reverse occurs. In essence, anode’s capability to handle and store lithium dictates the output voltage, total capacity (mAh), and charging speed. The Northwestern researchers, using graphene, have completely upended the very restrictive limitations of commonly-used anodes.

What is Graphene?

Graphene is a two-dimensional (2D) material with exceptional properties, such as ultra high electrical and thermal conductivities, wide-range optical transmittance and excellent mechanical strength and flexibility. These properties make it a promising material for emerging and existing applications in printed & flexible circuitry, ultra fast transistors, touch screens, advanced batteries and supercapacitors, ultra fast lasers, photodetectors and many other non-electronic applications.  One of the biggest problems is graphene is being able to produce graphene with high and consistent quality at acceptable costs.

Although graphene technology is still in its infancy, remarkable progress has been made in the last few years developing graphene production methods. Numerous opto and electronic devices based on graphene have been demonstrated on lab-scale models. However, the numerous challenges of graphene technology should not be underestimated. The lack of bandgap in graphene is its key fundamental challenge. Other technology challenges are related to the development of industrial methods to produce graphene with high and consistent quality at acceptable costs.

GT Advanced Technologies Can Deliver Graphene at lower Costs than Anybody Else?

If you remember above that GT stated that their silicon carbide process paired with Hyperion Technology can produce thin silicon carbide lamina at the fraction of the cost of wafers cost today.  The interesting thing about silicon carbide can produce graphene!  According to I-Micronews, “graphene materials can be produced as tiny flakes (nanoplatelets) or in the form of a large-size sheet on different substrates, such as a metal foil or silicon carbide (SiC)“.

Furthermore, I-Micronews states that, “The catalytic chemical vapor deposition (CVD) of graphene on metals, featuring the high potential for both scalability and high material quality, has the largest potential for mass production of graphene opto and electronic devices. Although the market potential of high-quality epitaxial graphene on SiC is limited by the dimensions and high costs of SiC wafers, it may be successfully applied to produce some high-end electronic applications. The nanoplatelets produced by different methods, such as liquid phase epitaxy or reduction of graphene oxide can be used to produce conductive inks for printed electronics and additive materials for energy storage devices, such as Li-ion batteries and supercapacitors”.

GT Q2 2013

In the longer-term, the higher growth opportunity with silicon carbide for GT is in pairing it with our Hyperion technology in order to produce thin silicon carbide lamina at a fraction of the cost of what wafers cost today.

GT just announced a deal with Kyma Technologies last month and acquired exclusive rights from Kyma Technologies, Inc. for its plasma vapor deposition (PVD) process technology and know-how.   The GT press released focused exclusively on the LED benefit but if you read the Kyma press release, you would find out it not only focused on the LED benefits but the benefits GT could find in nitride power electronics.  GT’s Spark Plasma Sintering (SPS) Technology is also touted as a technology that “retains nano-structures” and SPS will play a key role in Silicon Carbide (SiC) for the power electronics market as well as shaping graphene.

Kyma Technologies Feb 18, 2014

After many years of advancing our patented PVDNC™ technology, we are excited to partner with GT Advanced Technologies who we believe is well positioned to broadly disseminate this technology not only into the rapidly growing market for nitride based LEDs but also into the nascent market for nitride based power electronics,” said Keith Evans, Kyma’s President and CEO.

Dan Squiller – The “Battery” Guy

GT’s Dan , knows a few things about lithium-ion batteries having been the CEO of Powergenix,  before coming to GT in August 2012, as President of PV and Worldwide Operations.    PowerGenix focused on nickel-zinc batteries instead of lithium-ion batteries, but Dan Squiller is very familiar with both battery technologies.   Squiller was also involved in positioning PowerGenix to go after the hybrid vehicle battery market, so this segment of the market is also well-known to him.  In a 2011 interview, Dan Squiller actually discusses lithium-ion batteries as being expensive, but his new company GT Advanced Technologies might hold a key to reducing the cost of lithium-ion batteries and supercharging them with graphene nano structures.

Dan Squiller PowerGenix CEO, 2009

Lithium-ion batteries do have a higher power density than nickel-zincs, and a longer run time. That means they’re better suited to electric-only vehicles–a market that PowerGenix’s Squiller says he won’t be pursuing.

Obscure Analyst Takeaway

This has been a lot to digest in one article.  GT has some other aces up their sleeve related to the Power Electronics market place that involves ceramic formation, thin semi-conductor ceramic patent , Spark Plasma Sintering Technology (SPS), Silicon Carbide Furnaces to grow SiC along with Hyperion’s unique ability to exfoliate material to create the lowest cost SiC wafers. The cost of producing SiC wafers also has a direct relationship to the cost of producing nanoplatelets (tiny flakes) of graphene.  Let’s not forget that graphene material that holds the key to Tesla and their ability to design state-of-the-art lithium-ion batteries within their gigafactory that hopes to begin production by 2017.

GT Advanced Technology is always far ahead of the market adoption curve.  However, the Electric Hybrid Vehicle industry specifically Power Electronics will drive tremendous growth and demand for GT’s Silicon Carbide (SiC).  GT will play a major in providing affordable SiC wafers for this industry. Either as a full solution, furnace and Hyperion finisher or as a materials play to grow the SiC and finish it themselves with Hyperion.   As SiC adoption within the Power Electronics industry begins to take off, the lessons learned and cost reductions gained will open up a new market for GT to begin serving.   The next market that will open up will be semi-conductors for electronic devices, generators and household devices.

GT may not land a deal with Tesla tomorrow or even by the end of 2015, but if I was a betting man I wouldn’t bet against GT Advanced Technologies, because they have the technology and the ability to deliver the goods to Tesla Motors just like they are doing for Apple!

~Obscure Analyst 3/10/14

Full Disclosure I am long GTAT and have no plans to buy or sell any holdings in the next 72 hours.

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