Price hikes, high SiC growth, and AI demand reinforce the power semiconductor upcycle

Overview

The report uses UNT's 1H26 results and conference-call guidance as an entry point to map across China's power semiconductor industry. The core view is that the industry will maintain strong momentum in the second half of 2026: high capacity utilization provides the basis for price increases, SiC devices are seeing both volume and price growth, the automotive localization trend continues, and artificial intelligence infrastructure and optical interconnects bring new sources of growth.

Core views

First, Chinese SiC device companies' growth guidance is higher than that of global peers, and their global share is expected to continue rising. Second, UNT's actual price increase is about 15%, which can still drive a high-single-digit percentage point improvement in gross margin even if costs rise by about 5%. Third, UNT raised its 2026 SiC revenue target to about RMB3.0 billion, with about 70%–80% of the growth coming from volume and the rest from higher average selling prices, indicating simultaneous improvement in demand and pricing. Fourth, artificial intelligence infrastructure is beginning to expand demand for power devices and is pushing optical interconnect technologies such as silicon photonics into mass production.

Analysis framework

The report uses a cross-company results read-through approach, extrapolating UNT's capacity utilization, pricing, costs, SiC revenue guidance, and new-business progress to China's power semiconductor industry, and combines this with automotive localization and artificial intelligence infrastructure demand to assess the industry's direction in the second half of 2026.

Methodology notes

• Company performance analysisCross-company performance read-through

  Using operating data from a representative company to infer industry trends

  The report uses UNT's price-increase execution, capacity utilization, and SiC revenue guidance as an observation sample to assess changes in pricing, profitability, and share for Chinese power semiconductor companies.

• Profitability analysisVolume-price-cost breakdown

  Separately evaluating the impact of volume, average selling price, and costs on revenue and gross margin

  SiC revenue growth is mainly contributed by volume, while higher average selling prices provide additional upside; the roughly 15% price increase and roughly 5% cost rise create positive profit leverage.

• Industry trend analysisDemand-driver analysis

  Identifying end-demand sources such as automotive localization and artificial intelligence infrastructure

  The report believes automotive localization remains the fundamental driver, while artificial intelligence infrastructure has become a new growth source for power semiconductors and optical interconnect businesses.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• UNT (688469.SS)

  Core performance observation sample

  Strengths

  Relatively high capacity utilization, negotiated and implemented price increases, significantly raised SiC revenue guidance, and multiple optical interconnect technology platforms.

  Weaknesses

  The report does not cover the company and lacks a formal rating, target price, and complete earnings forecasts.

  Comparison

  Its guided SiC revenue growth is higher than the overall level of global peers, serving as evidence of Chinese companies' share gains.

  Risks

  The pace at which price increases are reflected, higher-than-expected costs, volume growth falling short of guidance, and production ramp-up of new businesses could all weaken profitability improvement.

• Chinese SiC device companies

  Main industry beneficiaries

  Strengths

  Growth guidance is higher than global peers, benefiting from volume expansion, higher average selling prices, and localization.

  Weaknesses

  Capacity expansion, price competition, and technology iteration may lead to divergence in profitability among companies.

  Comparison

  Compared with global peers, Chinese companies are growing faster and are expected to continue increasing their global market share.

  Risks

  A slowdown in global demand, intensified competition, and declines in yield or capacity utilization may affect share and profits.

• Yangjie Technology

  Example beneficiary of artificial intelligence infrastructure demand

  Strengths

  In addition to automotive localization, it has begun to gain incremental demand from artificial intelligence infrastructure.

  Weaknesses

  The report does not provide specific artificial intelligence business revenue, profit contribution, or forecasts for the company.

  Comparison

  Alongside SICC, it is a power semiconductor company for which artificial intelligence infrastructure has begun to contribute growth.

  Risks

  Conversion and sustainability of artificial-intelligence-related orders still require verification by subsequent data.

• SICC

  Example beneficiary of artificial intelligence infrastructure and the SiC industry

  Strengths

  Benefits simultaneously from SiC industry expansion and new demand from artificial intelligence infrastructure.

  Weaknesses

  The report does not quantify the contribution of artificial intelligence demand to revenue and earnings.

  Comparison

  Together with Yangjie Technology, it reflects the transmission of artificial intelligence infrastructure demand to the power semiconductor industry.

  Risks

  Demand realization, industry supply expansion, and price volatility may affect earnings leverage.

Key data

• UNT actual price increaseAbout 15%The initial notified increase was 15%–25%, and the implemented increase after customer negotiations is about 15%.
• Timing of price-increase reflectionFrom the end of the third quarter of 2026It is expected to begin showing up in financial data at that time.
• Expected cost increaseAbout 5%Used to estimate net profitability improvement after the price increase.
• Expected gross margin improvementHigh-single-digit percentage pointsFormed after the roughly 15% price increase partly offsets the roughly 5% cost rise.
• 2026 SiC device revenue guidanceAbout RMB3.0 billionCorresponds to year-on-year growth of about 100%; previous guidance was for growth of more than 50%.
• Sources of SiC revenue growthAbout 70%–80% from volume growthThe remaining growth mainly comes from higher average selling prices.
• Optical interconnect progressSilicon photonics chips have entered mass productionThe company has also established technology platforms including VCSEL, InP, TFLN, SiCe, and MEMS OCS.

Impact & implications

Price increases and high capacity utilization are expected to drive simultaneous improvements in revenue and gross margin for power semiconductor companies, while rapid SiC volume growth will help Chinese companies expand global share. Automotive localization provides a medium-term demand foundation, and artificial intelligence infrastructure may raise the growth trajectory of companies related to power devices and optical interconnects. However, UNT itself is not covered by the report, and the report does not provide a target price, so the positive industry view cannot be directly equated with a buy recommendation on the stock.

Risks

• Customer acceptance of price increases or the pace of implementation may be lower than expected.
• Increases in raw material, manufacturing, and other costs may exceed the roughly 5% assumption, compressing room for gross margin improvement.
• A decline in capacity utilization or a slowdown in end demand could weaken the industry's pricing power.
• SiC volume growth or average selling price increases may fall short of guidance, causing the RMB3.0 billion revenue target to be missed.
• Incremental demand from automotive localization and artificial intelligence infrastructure may fall short of expectations.
• There is uncertainty around the production ramp-up, customer qualification, and commercialization progress of new optical interconnect technologies.
• The institutions mentioned in the report may have shareholdings, investment banking business, or other commercial relationships with some covered companies, and investors should pay attention to potential conflicts of interest.

What to watch

• The extent to which the roughly 15% actual price increase is reflected in financial data at the end of the third quarter and in the fourth quarter of 2026.
• Whether gross margin can achieve the high-single-digit percentage point improvement expected by management.
• Whether 2026 SiC device revenue can reach about RMB3.0 billion and the target of about 100% year-on-year growth.
• Whether volume and average selling price contributions within SiC growth maintain the expected structure of about 70%–80% and the remaining portion.
• Industry capacity utilization, the competitive landscape, and changes in Chinese companies' global market share.
• The actual contribution of automotive localization orders and artificial intelligence infrastructure demand to companies such as Yangjie Technology and SICC.
• Volume ramp-up of silicon photonics chip mass production and customer adoption progress for other optical interconnect technology platforms.