China's 6-Inch SiC Substrate Prices Plummet to $400
Since early 2024, the prices of 6-inch silicon carbide (SiC) substrates have experienced a continuous decline. The industry has swiftly shifted from a state of supply shortages to one of oversupply, with expectations for further price reductions in the future. As Chinese manufacturers accelerate their production capacity, the imbalance between supply and demand is becoming more pronounced. Industry experts predict that consolidation within the sector may occur sooner than expected, potentially starting as early as mid-2025.
Reports indicate that by mid-2024, the price of 6-inch SiC substrates has fallen below $500, approaching the production cost for many Chinese manufacturers. However, by the fourth quarter, prices may further decrease to $450 or even $400, imposing significant financial strain on most producers. Some leading manufacturers are reportedly exploring options to sell their businesses to prevent ongoing substantial losses.
The oversupply of SiC substrates is particularly pronounced in the Chinese market, where chaotic pricing has contributed to increased market instability. While domestic production capacity for SiC substrates has surged, there is considerable variance in yield rates among different suppliers, with some facing challenges in fulfilling orders. Intense competition among suppliers has driven prices lower, forcing many manufacturers to sell at a loss.
In response to the declining prices, many customers have opted to wait, hoping for further price drops, which has hindered suppliers' pricing strategies from effectively stimulating demand. Additionally, in the primary application sectors for SiC substrates—electric vehicles and photovoltaic markets—customers remain cautious due to lengthy validation periods of six months to a year. This caution stems from concerns that suppliers may face bankruptcy before the validation period concludes, further affecting supply chain liquidity.
Compared to international competitors, Chinese SiC substrate manufacturers are reducing prices at a faster rate. By early 2024, the top Chinese suppliers had cut prices by over 30%, with third-quarter prices falling below $500, while international quotes remained as high as $850 at the end of 2023. The rapid expansion and significant price reductions by Chinese suppliers have taken international competitors by surprise.
Forecasts suggest that in 2024, Chinese suppliers will account for over half of global SiC substrate capacity. Leading manufacturers, including Tianjiao He Da, Tianyue Advanced, Tongguang Semiconductor, Shuo Ke Crystal, and Sanan Semiconductor, are playing pivotal roles in this expansion. As the profitability outlook for the SiC substrate industry remains uncertain, the price war among suppliers has intensified, with low pricing becoming the only strategy for survival.
Initially, industry insiders anticipated that consolidation within the SiC substrate sector would not occur until 2026; however, as price competition intensifies, market consolidation may happen by mid-2025. Although some Chinese suppliers are aggressively expanding their production, their ability to maintain operations in such a low-price environment has become a critical issue. Currently, companies like Tianyue Advanced, supported by parent company resources, may retain some financial strength, but most manufacturers face dual pressures of low capacity utilization and weak demand.
Experts note that the future survival of the SiC substrate industry will increasingly depend on robust financial backing, as market demand continues to weaken, exacerbating challenges for suppliers. The coming months could witness significant shifts in this sector, as the industry landscape is quietly being reshaped.
