Silicon Carbide Industry Enters Critical Transition Phase as Technology Matures and Demand Drivers Shift

Silicon Carbide Industry Enters Critical Transition Phase as Technology Matures and Demand Drivers Shift

The global silicon carbide  industry is navigating a pivotal transformation in early 2026, characterized by accelerating technological advancements, substantial capacity expansions across multiple geographies, and a notable reorientation of demand drivers away from electric vehicles toward artificial intelligence data center infrastructure. While short-term market adjustments persist, the broader trajectory points toward continued market expansion underpinned by maturing manufacturing processes and expanding application frontiers.

Technological Milestones: 12-Inch Substrates Emerge from R&D to Commercial Validation

The industry has witnessed significant breakthroughs in large-diameter substrate development. In recent months, Luxiao Technology announced the successful fabrication of a 12-inch silicon carbide single-crystal sample, completing full-process development and testing from crystal growth through substrate manufacturing. This achievement follows Wolfspeed’s January 2026 announcement of its own 300mm (12-inch) single-crystal SiC wafer production, underscoring the accelerating pace of large-diameter technology development globally.

Jingsheng Mechanical & Electrical has established a pilot line for 12-inch silicon carbide substrate processing and initiated sample verification with industrial chain customers, while its 8-inch silicon carbide substrates have successfully secured volume orders from both domestic and international clients following positive customer validation. The company has also made breakthroughs in 12-inch optical-grade silicon carbide substrate development and commenced small-batch production.

The company achieved a major milestone in core SiC equipment development with the successful delivery of a 12-inch single-wafer silicon carbide epitaxial growth system to Han Tian Tian Cheng, a leading global SiC epi-wafer manufacturer. This technological advancement is poised to drive the SiC industry chain toward larger diameters, enhanced efficiency, and reduced manufacturing complexity, injecting momentum into China’s pursuit of autonomy and industrial upgrading in the wide-bandgap semiconductor sector.

Hefei Luxiao Semiconductor has also announced significant progress in 8-inch conductive SiC substrate research, reporting that its crystal quality meets or exceeds mainstream industry benchmarks across key parameters including micropipe density, surface roughness, dislocation density, and resistivity distribution uniformity.

Industry Structure: Shifting Market Leadership and Intensifying Competition

The competitive landscape of the SiC substrate market has undergone a notable realignment. According to a report from Fuji Keizai, SICC achieved the world’s top market share in both 6-inch and 8-inch silicon carbide substrates in 2025, with its global share of 8-inch products surpassing 50 percent. This milestone breaks Wolfspeed’s long-standing record as the industry leader. From consistently ranking among the global top three to ascending to the second position in 2024 and reaching first place in 2025, SICC has completed a remarkable trajectory over three years.

SICC’s Shanghai Lingang facility, which commenced production in mid-2023, has been instrumental in translating long-term technological accumulation into market advantage. As competition intensifies in the 6-inch segment, the company is shifting its strategic focus toward expanding 8-inch substrate capacity and improving yields, with plans to increase the shipment ratio of larger-diameter products to optimize its product mix.

International Players: Strategic Repositioning Toward AI Data Centers

Wolfspeed has completed the shutdown of its 150mm wafer fabrication facility in Durham one month ahead of schedule and plans to fully transition production focus to its 200mm facility in Mohawk Valley during 2026. Management has indicated that while the transition entails short-term underutilization costs, larger-diameter wafers will support structurally lower unit costs over the long term. Notably, Wolfspeed’s AI data center-related revenue has doubled over the past three quarters, and the company plans to prioritize SiC solutions tailored for AI server power architectures in 2026, targeting the market migration from 400V to 800V systems.

Infineon has set a fiscal 2026 AI-related revenue target of Euro 1.5 billion, with plans to increase this figure to Euro 2.5 billion by 2027. On the manufacturing front, Module 3 at its Kulim, Malaysia site—dedicated to 200mm SiC wafer production—has entered the ramp-up phase. The company has reiterated its “30-30” strategic objective of securing a 30 percent share of the global SiC market by 2030.

STMicroelectronics continues to emphasize vertical integration across the SiC supply chain. Its integrated SiC substrate manufacturing facility in Catania, Italy, is scheduled to commence production in 2026. In China, the joint venture with San’an Optoelectronics has completed multi-product validation and entered the risk production stage. The project will establish an annual capacity of approximately 480,000 8-inch SiC wafers, primarily for automotive-grade power control chips.

Bosch has announced the acquisition of TSI Semiconductors and will invest $1.5 billion in upgrading the facility’s production lines to manufacture silicon carbide semiconductors. Starting in 2026, silicon carbide-based 200mm wafers will be used to manufacture the first chips in a facility with approximately 10,000 square meters of clean room space. Bosch has been producing SiC chips since 2021 at its Reutlingen, Germany location and projects a substantial expansion of its global SiC chip offerings by the end of 2030.

Domestic Capacity Expansion: Major Projects Progressing

In China, several major SiC manufacturing projects have reached significant milestones. The Xiamen Silan Jihong 8-inch SiC power device chip manufacturing line has been completed and will enter trial production in the first quarter of 2026. Phase one of the project involves a total investment of RMB 7 billion and is expected to achieve an annual production capacity of 420,000 8-inch SiC wafers upon full capacity. A second phase, with an additional investment of RMB 5 billion, will raise total capacity to 720,000 wafers per year.

CRRC Times Electric’s Zhuzhou-based 8-inch SiC production line completed equipment move-in and line qualification by the end of 2025 and is now preparing for mass production. Beyond automotive markets, the company plans to extend its offerings to include 3300V and higher voltage products for industrial applications.

Application Expansion: Beyond Electric Vehicles

SiC penetration rates have demonstrated steady progress across multiple application sectors. In new energy vehicles, SiC main drive penetration has exceeded 30 percent. In the photovoltaic sector, SiC diode and MOSFET adoption in domestic 200kW-plus string inverters has surpassed 60 percent. For data centers, NVIDIA’s 800V DC architecture has stimulated volume adoption of SiC plus GaN in 3kW-plus Titanium-class power supply units, with penetration reaching 24 percent.

The application boundaries of silicon carbide continue to expand. The exponential growth of AI computing power is driving a revolutionary upgrade in data center power architectures, with 800V high-voltage direct current and solid-state transformers creating unprecedented market opportunities. In the field of AR optics, semi-insulating SiC substrates are achieving breakthrough applications due to their high thermal stability and low dispersion characteristics. In advanced packaging, SiC interposers offer potential for enhanced thermal dissipation, with major players advancing evaluation for adoption in heterogeneous integration schemes.

Global Market Trajectory

The global silicon carbide market continues to demonstrate robust growth prospects across multiple research forecasts. According to QYResearch, global SiC semiconductor market sales reached RMB 32.6 billion in 2025 and are projected to reach RMB 131.16 billion by 2032, representing a compound annual growth rate of 22.3 percent from 2026 through 2032. Fortune Business Insights reported the global SiC market at $5.77 billion in 2025, with projections to expand from $6.28 billion in 2026 to $12.36 billion by 2034 at a CAGR of 8.83 percent. USD Analytics estimates the silicon carbide wafer market, valued at $1.1 billion in 2025, is projected to reach $7.8 billion by 2035, growing at a CAGR of 21.7 percent.

Yole Group reports that upstream process capacity utilization is expected to decline to approximately 50 percent by 2025, while China has emerged as the world’s largest region for SiC equipment capital expenditure. Domestic equipment suppliers have achieved competitive parity with international counterparts in crystal growth and epitaxy, though international players maintain leadership in thinning, metrology, and advanced ion implantation.

Outlook

As the industry moves through 2026, several key themes will shape its trajectory. The transition from 6-inch to 8-inch manufacturing continues to accelerate, driven by the cost advantages of larger-diameter wafers and sustained capacity investments across both established and emerging players. AI data center demand has emerged as a meaningful counterweight to near-term EV market moderation, with major international suppliers reorienting product strategies accordingly. Chinese suppliers have gained significant ground in global market positioning, particularly in substrate manufacturing, while domestic equipment capabilities continue to narrow the gap with international leaders. Regulatory and environmental considerations are also shaping capacity planning, with sustainability requirements being integrated into facility design and operational frameworks.