Tesla's (NASDAQ: TSLA) 2023 investor day presentation gave some semiconductor shareholders a scare. The company has been designing a new next-gen powertrain for its electric vehicles (EVs), one that uses 75% less silicon carbide (SiC) than before. Shares of chip design and manufacturing companies involved with SiC took a brief dip following the announcement.

The emphasis is on the word "brief," because Tesla's announcement shouldn't be viewed as bad news for the nascent SiC chip market. Aehr Test Systems (NASDAQ: AEHR), a top stock to bet on the development of silicon carbide, doesn't believe Tesla's 75% reduction for SiC chips means the SiC industry will suffer 75% less demand. 

Silicon is the basic substrate for the majority of semiconductors -- building blocks for all things computing tech and electronic devices. But for higher-voltage applications, like in EV powertrains, silicon has its limitations. That's where silicon carbide (silicon mixed with carbon) comes in, since it can better handle higher voltages and heat. 

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Source Fool.com