October 16, 2024 /SemiMedia/ — Since early 2024, prices for 150mm silicon carbide (SiC) substrates in China have continued to decline, shifting from a supply shortage to oversupply. With local manufacturers accelerating production, market imbalance has intensified, and industry experts now anticipate consolidation by mid-2025, earlier than previously expected.

By mid-2024, prices for 150mm SiC substrates had fallen below $500, nearing the production cost line for Chinese manufacturers. In the fourth quarter, prices further declined to $450 or even $400, adding financial pressure on suppliers. Some firms have started exploring business sales to avert continued losses.

Despite rapid growth in SiC substrate capacity within China, yield rates vary significantly among suppliers, creating challenges in order fulfillment. Fierce competition has led to price wars, forcing many companies to sell at a loss. Persistent price drops have prompted customers to adopt a wait-and-see approach, expecting further reductions, which has undercut suppliers’ pricing strategies. Major applications such as electric vehicles and photovoltaic power generation—key markets for SiC devices—require a validation period of 6 to 12 months, making customers cautious when selecting suppliers, fearing potential bankruptcy before validation ends. This has further disrupted supply chain liquidity.

Chinese suppliers have reduced prices more aggressively than international competitors. In early 2024, leading Chinese suppliers cut prices by over 30%, with third-quarter rates dropping below $500, while international quotes remained as high as $850. Rapid expansion and sharp price cuts by Chinese manufacturers have caught global rivals off guard. China’s production capacity is expected to account for more than half of global demand in 2024, with companies such as TanKeBlue, SICC Co., Ltd., TongGuang Semiconductor, SICC, and Sanan Optoelectronics playing critical roles in expanding output.

However, even with proactive expansion, the low-price environment has strained operations for many companies. Firms like SICC Co., Ltd., backed by parent companies, still possess some financial strength, but most are struggling with low capacity utilization and weak demand. Industry insiders indicate that the survival of SiC substrate producers will rely on strong financial backing. The sector could face significant changes in the coming months, as market dynamics are quietly shifting.