This diode failed due to electrical overstress, likely reverse biasing greater than 1000V. The die fractured when it was de-processed. The melt-through site is indicated by the arrow. Quality issues may have been a factor including post and die attach solder voids, and potting voids, which would be expected to impact the maximum power capability of the diode causing it to fail at lower than rated conditions.
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Robert Dinse says:
In my early days of learning about electronics, I overstressed, damaged, and occasionally vaporized quite a few electronic components. I’d love to have been able to see details like this. I experimented with things like neon bulbs without a ballast (they go really bright for a tiny fraction of a second before exploding).