Boom for Power Semiconductors The AI boom Saves the SiC industry

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Silicon carbide was long considered a key material for electric cars, solar inverters, and battery storage. Now SiC is gaining a new growth driver: AI data centers. In China, demand and prices are rising again. After the ruinous price war of 2025, the industry is hoping for a new cycle.

In China, the artificial intelligence boom is becoming the new growth driver for silicon carbide. SiC had its commercial breakthrough in electric cars, solar inverters, and battery storage. Now, data center operators are discovering it as a key technology for their power supply; a trend that was confirmed not least at Computex and PCIM 2026.

Just a year ago, the market was embroiled in a destructive price war that crushed many smaller providers and ruined margins. But now prices are rising again, reports the Chinese technology portal 36Kr. "In 2026, demand for silicon carbide (SiC) has surged, triggering a wave of price increases across the industry that sweeps away the gloom created by the price wars of 2025," writes 36Kr.

There is hope that a new growth cycle for the industry has begun. The previous one, which occurred before last year's ruinous price war, was driven by demand from the energy transition. In electric vehicles, SiC transistors improve drivetrain efficiency, increase range, and reduce weight and space requirements. In solar systems and battery storage, they reduce losses during power conversion. The material was also used in consumer electronics.

Electromobility, photovoltaics, and energy storage had rapidly driven the commercialization of silicon carbide. However, the current wave of new demand clearly stems from the boom in AI infrastructure. In data centers, power density is rising rapidly, with the power of individual server racks climbing from the kilowatt to the megawatt range.

800 HVDC as Key

To efficiently distribute such amounts of power, the AI industry is shifting its architecture to 800 volts and high-voltage direct current, known in technical jargon as HVDC for High Voltage Direct Current. The physical properties that have long made SiC attractive for increasingly demanding power electronics are now also making it the new favorite for powering the AI industry. The material withstands high voltages, loses little energy during switching, and endures high temperatures.

More and more SiC semiconductors are therefore found in HVDC systems, semiconductor transformers, so-called solid-state transformers (SST), in server power supplies, and in the power distribution of data centers. A SiC-based semiconductor transformer can directly convert the medium AC voltage from the grid into the 800-volt DC power needed by an AI cluster.

The Chinese investment bank Kaiyuan Securities estimates that by 2030, nearly half of the total SiC demand could come from AI infrastructure. The same pattern is visible in the global market. The global market for silicon carbide grew by more than 28 percent in 2024 to nearly 3.8 billion euros (approx. $4.1 billion) and could swell to around 17 billion euros (approx. $18.3 billion) by 2030, according to the market research firm "Global Information."

The global market leaders are benefiting from this trend, including the German company Infineon, the European firm STMicroelectronics, Onsemi, Rohm, and the American pioneer Wolfspeed, which had faced tough times in the interim.

Attentive Competition

At the same time, Chinese manufacturers are growing rapidly and capturing increasingly large market shares. In substrates, the most technically demanding part of the value chain, Chinese companies SICC and TankeBlue already account for about half of the global market for six-inch wafers, reports 36Kr. The transition to eight-inch wafers has begun, but there is still enormous demand for the previous generation, particularly in China.

At China Resources Microelectronics, revenue from silicon carbide power components and modules more than doubled in 2025, according to the company. Shenzhen Basic Semiconductor's SiC modules are now reportedly found in more than 50 vehicle models from over ten automakers. Additionally, the railway technology company CRRC is building a high-frequency SiC auxiliary inverter in Zhuzhou, which is used, among other places, on line 5 of the Shenzhen subway.

The scaling enabled by their domestic market is also making Chinese SiC manufacturers increasingly successful internationally. "Driven by demand from AI infrastructure, electric vehicles, solar energy, energy storage, and consumer electronics, China's silicon carbide suppliers are evolving from a story of import substitution to a story of global competitiveness," writes 36Kr.

Chinese companies are managing to establish themselves in more and more supply chains that were dominated by international providers just a few years ago. Overall, however, the trend is strong enough to lift both Chinese and international manufacturers out of last year's slump.

"Within just one year, the silicon carbide industry has moved from the darkest days of a price war to the first signs of a new upswing," writes the Chinese technology portal. This time, however, the new cycle will no longer be driven solely by applications such as electric vehicles and renewable energy but unmistakably by the "explosive growth of AI infrastructure." 

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