In the first half of 2024, the silicon carbide market showed a stark contrast. On one hand, the financial report released by industry leader Wolfspeed indicated a 12% year-on-year decline in revenue and a significant increase in net losses, facing severe market pressure. On the other hand, despite the overall market being under pressure, the application prospects of silicon carbide as a key material for new energy vehicles remain broad, especially with the promotion of companies like Tesla, where the application of silicon carbide modules in electric drive and control systems is becoming increasingly widespread. However, with the significant drop in prices of silicon carbide-related products, along with challenges of short-term demand decline and excess inventory, the entire industry has to face reality and actively seek transformation and breakthroughs.
　　First, let's explore the reasons behind Wolfspeed's recent difficulties. Industry experts point out that the capacity utilization rate of the company's 8-inch silicon carbide wafers has been consistently low, with the wafer factory in Mohawk Valley operating at only 20%, and it is expected to only increase to 25% by the end of 2024. This means that for a considerable period, Wolfspeed's capacity utilization will be severely insufficient.
　　In addition, Wolfspeed is also facing challenges from an increasing number of competitors. Currently, the application of silicon carbide devices in the new energy vehicle sector is becoming more widespread, and as the largest market, China's rapid development of the silicon carbide industry chain technology has led to a continuous decline in domestic product prices, thereby weakening Wolfspeed's market competitiveness.
　　At the same time, Chinese silicon carbide companies are rapidly rising. For example, Tianyue Advanced achieved a revenue of 1.2 billion yuan in the first half of 2024, a staggering year-on-year increase of 1027%, successfully turning losses into profits. Yangjie Technology also achieved impressive results, with revenue reaching 6.5 billion yuan in the first half of the year, a year-on-year increase of 16%. Although some companies have seen a decline in profits, overall, most silicon carbide companies still maintain profitability.
　　The continuous decline in market prices has become the new normal in the silicon carbide industry. However, this price war is not an isolated phenomenon; other related technologies in the automotive field, such as autonomous driving and electronic electrical architecture, are also facing intense competitive pressure. Although the price war has brought certain impacts to the industry, it has also prompted companies to continuously pursue technological innovation and efficient production methods to reduce costs. Industry insiders expect that silicon carbide prices will gradually stabilize in the future, avoiding continued significant declines or cliff-like drops.
　　Compared to other industries, the semiconductor industry, due to its high barriers to entry and long return cycles, makes the strategy of 'selling at a loss' difficult to sustain in the long term. As market competition gradually rationalizes, companies will have to respond to price pressures by improving operational efficiency and enhancing technological strength.
　　Next, we explore the attractiveness of the Chinese silicon carbide market. Looking ahead, China is expected to become the core battleground for competition in the silicon carbide market. With the booming development of the new energy vehicle market, especially with the widespread adoption of well-known brands like Tesla, BYD, Li Auto, and Xiaomi, the application prospects of silicon carbide in the domestic market are becoming increasingly bright, and the market structure is thus facing reshaping. According to statistics, the global production capacity of 6-inch conductive silicon carbide substrates reached 21 million pieces in 2023, with a year-on-year growth rate of 96%. It is expected that by 2026, this number will surge to 56.9 million pieces, with an average annual compound growth rate of 39%. Among them, China's sales of silicon carbide substrates exceeded 1 million pieces in 2023, accounting for 42% of the global total capacity, and this proportion is expected to rise to about 50% by 2026.
　　At the same time, foreign silicon carbide companies are also actively laying out in the Chinese market. For example, Rohm Semiconductor has reached a long-term supply agreement with China's leading automotive supplier United Automotive Electronics Systems (UAES) to secure a foothold in the Chinese new energy vehicle market.
　　Industry experts hold an optimistic view on the development of the Chinese silicon carbide market. They point out that in the long run, China has laid a solid foundation in the new energy vehicle industry chain, and silicon carbide, as a key application in this field, will further promote the rapid development of the domestic industry. Although there is currently a certain gap in silicon carbide technology between China and developed countries in Europe and the United States, with the acceleration of domestic technology validation and reliability improvement, this gap is expected to narrow rapidly, thus driving the Chinese silicon carbide industry into a prosperous development period.
　　From the perspective of materials science, the pricing mechanism of silicon carbide has a certain rigidity. Although its market demand is expected to grow significantly and is likely to reduce overall system costs, due to the unique properties of silicon carbide materials, its chip prices are still higher than IGBT, making it difficult to drop to levels comparable to IGBT in the short term.
　　Despite the current challenges in the silicon carbide market, such as price fluctuations and unclear profit models, the industry generally believes that through continuous technological innovation, costs will gradually be shared, thus achieving long-term profitability. Therefore, leading companies are actively investing funds to promote technological innovation to build solid competitive barriers.
　　It is particularly noteworthy that the layout of the 8-inch silicon carbide wafer production line is regarded as a key barrier in the industry. Currently, silicon carbide technology is gradually transitioning from 6 inches to 8 inches, and this transformation is expected to be completed within the next five years, becoming the main trend in industry development. Some leading companies have already provided 8-inch silicon carbide samples to seize the technological advantage.
　　However, the iterative upgrade of 8-inch silicon carbide faces multiple challenges. Companies not only need to establish long-term strategic partnerships with upstream core material suppliers to ensure supply chain stability but also need to maintain close communication with downstream customers to flexibly develop customized solutions. Therefore, to gain an advantage in the next phase of competition in the silicon carbide market, companies must be well-prepared for the technological switch from 6 inches to 8 inches and formulate sufficient market competition strategies.
　　In addition, the silicon carbide market also faces challenges from the transformation of the automotive supply chain model. With the acceleration of the new energy vehicle transformation, the strategic position of semiconductors (especially silicon carbide) in automotive manufacturing is becoming increasingly prominent. More and more automotive manufacturers are beginning to bypass first-tier suppliers and directly procure silicon carbide devices. This trend was particularly evident at the 2024 Beijing Auto Show, indicating that the structure of the automotive supply chain will undergo profound adjustments in the future, potentially leading to changes in the industry landscape.
　　It is worth noting that China is the core country for the rapid growth of new energy vehicles globally, with a huge demand for automotive-grade chips. Many foreign brands are also targeting the Chinese market. Therefore, the competition in the silicon carbide market is not only a technological contest but also an intense game in the global automotive industry, especially in the new energy vehicle sector.
　　In the face of the rapid rise of Chinese new energy brands, countries around the world are feeling the competitive pressure from the market. To enhance the competitiveness of their domestic companies, governments are introducing supportive policies. For example, the Japanese government recently announced that it would provide substantial subsidies of up to 350 billion yen (approximately 1.4 billion yuan) to power battery projects for companies like Toyota and Nissan to strengthen the international competitiveness of Japan's battery industry. In addition, other countries are also implementing trade protection measures to safeguard their domestic markets. Canada has imposed tariffs of up to 101% on electric vehicles imported from China, while the United States has also raised tariffs on some Chinese-made electric vehicles to 100% on September 13.
　　The global landscape of the silicon carbide market in the future will be influenced by multiple factors. First, the technological advancements and breakthroughs of upstream companies in the silicon carbide industry chain will play a decisive role. Second, the market share capture by new energy vehicle manufacturers globally will also become a key factor. At the same time, the policy interventions and trade protection measures of various governments will play an important role in this fierce market competition. Under the combined effects of technological innovation, market competition, and policy games, the market prospects for silicon carbide will gradually unfold.