SICC Co Ltd: Structural Leadership in 8-inch SiC Substrates Underpins Multi-Year Growth

Core Conclusion

SICC (688234.SS) is a structural long-term beneficiary of the global shift to silicon carbide (SiC), with its dominant position in 8-inch substrates providing a defensible moat. The investment case is driven by a combination of accelerating demand diversification beyond electric vehicles (EVs), deepening integration within top-tier global supply chains, and a clear multi-factory capacity roadmap to meet a 58% sales volume target for 2026.

What the Market May Be Missing

The market likely still prices SICC as a commoditized semiconductor materials play, underestimating the quality and durability of its competitive edge. The company’s ~60% global share in 8-inch SiC substrates represents a formidable first-mover advantage that is difficult and capital-intensive to replicate. This leadership, combined with its strategic recognition from key customers like Bosch as a "preferred supplier," grants SICC higher pricing power and visibility into long-term demand, insulating it from pure cyclicality.

Evidence Chain

SICC has established commanding leadership in the critical 8-inch substrate transition. The company captured approximately 60% of the global 8-inch SiC substrate market in 2025, according to Yole. This leadership is an extension of its scale in the current generation, where it ranked first in 6-inch substrate shipments with a 27.6% volume share in 2025 per Fuji Keizai. The investment implication is clear: SICC is positioned as the primary capacity partner for device makers transitioning to larger, more cost-effective wafers, a shift that will define the next phase of SiC adoption.

Demand visibility is strong and rapidly diversifying, supporting a 58% volume growth target for 2026. Factory utilization has been at full capacity since the second half of 2025, with solid order visibility for this year. While EV demand remains robust, helped by adoption in vehicles priced from Rmb150k, new drivers have emerged from data centers (HVDC), industrial applications, and energy storage. Furthermore, nascent applications like AI glasses, which shipped a few thousand wafers last year, are expected to double in 2026. This underpins the company's aggressive 2026 sales target of 1 million wafers (50% 8-inch), up from 633k in 2025. The investment takeaway is that SICC's growth is becoming less reliant on a single end-market, enhancing earnings sustainability.

The company's strategic position within global supply chains has fundamentally improved. SICC was awarded "preferred supplier" status by Bosch, a testament to its technical and operational reliability. It is also a strategic supplier to leading SiC device makers like Infineon and ON Semi. Critically, major auto OEMs including Tesla, BYD, and Geely have visited SICC for business discussions over the past two years. This evidence indicates that SICC is no longer a mere merchant supplier but an integrated, strategic partner, which should translate into more stable, long-term agreements and co-investment in technology roadmaps.

Key Disagreements & Risks

Execution on capacity expansion is a key monitorable. The Shanghai Lingang fab is expected to reach its planned 960k wafers per year capacity by end-2026, while Jinan Phase II and the Malaysian fab are still ramping. Delays or yield issues could hinder market share gains. The primary financial risk remains faster-than-expected price erosion for SiC substrates, which could pressure margins despite volume growth. Competition is intensifying, and SICC must maintain its technology lead in 8-inch yields and cost to defend its dominant share.

Valuation & Trade Implications

We see the stock as attractive for investors seeking exposure to a high-conviction secular theme with a clear market leader. The near-term catalysts are operational: successful ramp of the Lingang facility and further order announcements from strategic clients in new application areas. The company’s valuation reflects its growth profile and leadership position. Continued execution on its capacity roadmap and yield improvements should drive a re-rating as the durability of its market share and margin profile becomes more evident.

Appendix: Key Data Summary

Capacity Roadmap

Financial Forecast Snapshot