The landscape of the silicon carbide (SiC) industry has evolved drastically, particularly as some major international players find themselves grappling with losses while their domestic counterparts in China experience financial upsidesIn an era where more industries are leaning towards sustainable technologies, the surge in domestic supply and production capabilities by Chinese SiC manufacturers is noteworthyThese companies are not only ramping up their output but are also making significant strides in the production of 8-inch wafer technologies, thus expanding their market share in a sector previously dominated by foreign giants.

One prominent example is Wolfspeed, an industry leader in advanced semiconductor technologies that recently reported its financial outcomes for FY2023. With revenues plummeting to $807 million—reflecting a steep decline of 12.44%—the company additionally revealed a net loss of $864 million, marking a staggering rise in losses of over 161%. This downward trend highlights the challenges faced by established companies amid stiff competition and changing market dynamics.

In stark contrast, leading domestic SiC manufacturers in China have demonstrated impressive growth metrics

According to data from Choice, firms like Tianyue Advanced showcased a remarkable revenue increase of over 108% in the first half of 2024, with earnings soaring to approximately $1.02 billion—an astonishing annual growth of 241.40%. Other notable players such as Sanan Optoelectronics and Yangjie Technology also reported healthy growth rates, emphasizing a robust upward trajectory within the local marketThis differential performance can largely be attributed to domestic manufacturers leveraging advantages in cost and pricing, thereby rapidly increasing their sales volumes and, subsequently, market presence.

Despite their growth, a pertinent question arises: How significant is the market potential for SiC, and can Chinese companies solidify their position in the global arena? SiC represents the third generation of semiconductors, proving vital in high-growth sectors such as electric vehicles (EVs), 5G technology, and renewable energy

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Compared to previous semiconductor generations, SiC devices offer pronounced advantages like lower energy loss, smaller device sizes, and higher switching frequencies—making them outstanding choices for diverse applications.

For instance, SiC devices have become essential components in the electric vehicle sector, where their efficiency and performance can elevate vehicle capabilities significantlyThey are instrumental in enhancing the performance of critical components such as inverters and onboard chargers (OBC). By incorporating SiC devices, EVs can achieve higher inverter efficiency, reduced system size, diminished overall costs, and improved driving rangesDespite the higher initial costs associated with SiC-MOS technology—approximately three times the cost of traditional Si-IGBT technologies—companies such as Infineon have estimated that the energy savings can offset these costs, leading to potential overall savings of up to 6%.

SiC's advantages become even more pronounced in 800V systems, such as the example set by the Xiaopeng G9, which has shown a 5% increase in driving range compared to traditional 400V systems

With developments of offerings from other leading brands such as BYD, Nio, and Li Auto, the application rate of SiC power devices is expected to expand further across the EV marketAccording to TendForce, the market for SiC devices in the EV segment is projected to soar to approximately $5 billion by 2027.

Furthermore, the use of SiC in photovoltaic (PV) systems is similarly promisingIt's noted that SiC technologies can enhance conversion efficiency from 96% to over 99%, while simultaneously halving energy consumption and extending equipment lifespan substantiallyCASA predicts that by 2025, SiC devices will capture nearly 50% of the PV market, with the market size reaching towards $2 billion by 2026.

Given these statistics, it's evident that the demand for SiC power devices is intricately linked to the booming electric vehicle market, of which China is the largest producer and consumer

Data from the China Association of Automobile Manufacturers indicates that 4.93 million electric vehicles were produced in the first half of 2024, a remarkable year-on-year increase of 30.01%. These vehicles represented over 50% of the global electric vehicle market, underscoring China's pivotal role in driving the SiC industry forward.

As domestic firms continue to amplify their production capabilities, they are also starting to focus on the critical substrate technology—an aspect crucial for the quality and performance of SiC devicesDespite the first-mover advantages held by overseas firms that have a wealth of experience, the evolution of China's own SiC substrate manufacturing holds significant promiseMajor players such as STMicroelectronics and Infineon currently dominate over 91% of the silicon carbide MOSFET device market, presenting a high barrier to entry for newer competitors.

However, the combined responsiveness among firms like Tianyue Advanced and Sanan, which are rapidly boosting their production capabilities, suggests that the tide may be turning

As of late 2023, China's production capacity for 6-inch SiC substrates has remarkably increased to about 42%, with expectations to reach nearly half by 2026. Indeed, Tianyue Advanced proved its agility through impressive revenue recovery, reporting an improved gross margin following enhanced production volume.

Currently, over half of the top ten power semiconductor companies have engaged Tianyue Advanced as a partnerNot only has this bolstered their market position, but partnerships with established firms like Infineon further solidify their competitive edgeWith ambitions to produce 8-inch SiC substrates gaining momentum, the plans to implement infrastructure partnerships and collaborations indicate a proactive approach to capturing market share.

Ultimately, the environmental benefits associated with SiC technology, coupled with advancements in production scalability, position Chinese manufacturers favorably in the competitive landscape