Fierce price decline: 6-inch substrate drops nearly 30%, approaching the cost red line

Focusing on the silicon carbide substrate market, it has been plunged into an unprecedented price drop since 2024. The mainstream 6-inch silicon carbide substrate, which used to have unlimited popularity in the market, has experienced a price trend like riding a slide, plummeting all the way. Data shows that in 2024, the price dropped by nearly 30% throughout the year. By mid year, the price had been halved to below $500, and in the fourth quarter, it continued to decline, hovering in the range of $400-450. This price is already within reach of the production cost line of domestic manufacturers, and many companies have felt a piercing chill in this price storm. Silicon carbide substrate, as the core upstream link of the silicon carbide industry chain, accounts for nearly 50% of the cost composition of the entire industry chain and can be regarded as the "pricing anchor" of the industry chain. The significant decline in its price is like toppling a domino, triggering a chain reaction throughout the entire industry chain. Downstream epitaxial wafer and chip manufacturing companies have relied on stable substrate prices to control costs and plan profits. However, the uncontrolled decline in substrate prices has mercilessly compressed their profit margins. Projects that could have been profitable have become unprofitable or even face the risk of loss due to fluctuations in substrate prices, and there is widespread concern in the industry about future profit expectations.

Behind the price war: overcapacity+slowing demand+homogeneous competition

The avalanche decline in the price of silicon carbide substrates is not accidental, but the result of multiple factors intertwined and working together. The first and foremost issue is overcapacity. In the past few years, the prospects of the silicon carbide market have been bright, attracting global capital to flock in. According to incomplete statistics, 14 new 8-inch silicon carbide factories will be built worldwide in 2024, leading to a fierce arms race for capacity expansion. In China, the popularity of the silicon carbide industry remains high, with over 50 expansion projects landing in 2023, with a total investment of over 90 billion yuan. Such a large-scale production capacity investment has released a huge amount of silicon carbide substrates in a short period of time. When the supply in the market far exceeds demand, prices naturally become difficult to maintain high levels. In order to digest inventory and seize limited market share, companies have to choose to sell at a lower price, and a price war begins. The slowdown in demand has also dealt a heavy blow to the silicon carbide substrate market. New energy vehicles, as the largest downstream application market for silicon carbide substrates, have grown rapidly, driving the vigorous development of the entire silicon carbide industry. But as the market gradually saturates, the growth rate begins to slow down. The sales growth of new energy vehicles in 2024 fell short of expectations, which has led to a cooling of the purchasing demand for silicon carbide substrates by car companies. As upstream companies in the industrial chain, silicon carbide substrate enterprises have felt the "chill" from the end market, with reduced orders and inventory backlog, further exacerbating downward pressure on prices. Doubts about the sustainability of future demand have begun to emerge within the industry, and this pessimistic sentiment has to some extent driven down prices. The intensification of homogeneous competition has further intensified the price war in the silicon carbide substrate market. In the field of silicon carbide substrates, industrial grade products have attracted many companies to enter due to their relatively low technical barriers. For a time, there was a mix of good and bad industrial grade substrate products in the market, and product homogenization was severe. These enterprises find it difficult to form differentiated advantages in product performance and quality, and can only compete for customers and market share through price tactics. Low price competition has become the norm, continuously lowering the price level of the entire market, seriously impacting the original market pricing system, causing the price of silicon carbide substrates to continue to decline in disorderly competition.