UNT's first-half results validate the power semiconductor upcycle, with SiC and AI infrastructure demand supporting growth

Overview

Based on UNT's 1H26 results and earnings-call information, this report provides a cross-check of the Greater China power semiconductor industry. Morgan Stanley believes the industry will retain strong momentum in 2H26, supported by high utilization and rising prices; Chinese SiC device vendors' growth guidance exceeds that of global peers, and their market share is expected to continue increasing.

Core views

The key conclusions are: first, price increases and high utilization should improve power semiconductor companies' profitability; second, UNT's raised SiC revenue guidance indicates that volume expansion is the primary driver; third, beyond automotive localization, AI infrastructure is becoming a new source of growth for power semiconductor companies; and fourth, optical interconnect technology platforms and mass production of silicon photonics chips provide additional avenues for business expansion.

Analysis framework

The report applies an industry cross-check approach based on earnings-call information, assessing implications for the Greater China power semiconductor industry through pricing, costs, utilization, SiC revenue guidance, end-market demand, and technology progress.

Methodology notes

• Event-driven analysisEarnings-call cross-check

  Using UNT's results and management guidance as a validation sample for industry conditions

  Company-level information on price increases, margins, revenue, and demand is mapped to the power semiconductor and SiC supply chains to assess industry trends.

Asset mapping & comparison

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

• UNT (688469.SS)

  Earnings cross-check sample; not covered

  Strengths

  Raised SiC device revenue guidance, execution of price increases, and progress in optical interconnect technology platforms.

  Weaknesses

  Approximately 5% cost inflation will partly offset the margin improvement from price increases.

  Comparison

  Its SiC growth guidance supports the view that Chinese SiC vendors may grow faster than global peers.

  Risks

  Uncertainty remains around price-increase execution, customer negotiations, cost inflation, and delivery on revenue guidance.

• Chinese SiC device companies

  Industry beneficiary

  Strengths

  Growth guidance exceeds that of global peers, offering potential to gain global market share.

  Weaknesses

  Dependent on sustained high utilization, favorable pricing trends, and end-market demand.

  Comparison

  The report expects their growth to outpace global peers.

  Risks

  Global competition, reversal of pricing trends, demand slowdown, and lower capacity utilization.

• Power semiconductor industry

  Industry allocation direction

  Strengths

  Supported by high utilization, favorable pricing, automotive localization, and AI infrastructure demand.

  Weaknesses

  Margin improvement remains constrained by rising costs.

  Comparison

  The report assigns an Attractive industry view.

  Risks

  Failure to implement price increases, weaker-than-expected end-market demand, cost pressure, and changes in industry supply-demand dynamics.

Key data

• Proposed price increase15%-25%Covers analog, IGBT, MOSFET, and SiC devices; the actual increase agreed with customers is approximately 15%.
• Timing of financial impact from price increasesLate 3Q26Management expects the impact to begin appearing in financial statements then.
• Expected gross margin improvementHigh single digitThe approximately 15% price increase is expected to be partly offset by around 5% cost inflation.
• 2026 SiC device revenue guidanceApproximately Rmb3.0bn, up around 100% YoYPreviously guided for growth of more than 50% during the 1Q26 earnings call.
• Composition of SiC revenue growthApproximately 70%-80% volume growthThe remaining growth is from higher ASPs.
• Industry viewAttractiveApplies to the Greater China Technology Semiconductors coverage universe.

Impact & implications

If price increases are implemented as planned and utilization remains high, both revenue and profitability of power semiconductor companies could improve. SiC demand growth is primarily volume-driven, underscoring the importance of end-market penetration and capacity utilization; AI infrastructure demand could expand growth sources beyond the industry's traditional automotive demand.

Risks

• The magnitude or timing of price increases may fall short of expectations.
• Cost inflation may exceed management expectations, eroding gross margin improvement.
• SiC volume, ASP, or revenue growth guidance may not be achieved.
• Growth in automotive localization and AI infrastructure demand may slow.
• High utilization and favorable pricing trends may not be sustained.

What to watch

• The actual impact of price increases on revenue and gross margin from late 3Q26.
• Progress toward the approximately Rmb3.0bn SiC device revenue target, as well as the contribution mix of volumes and ASPs.
• Utilization rates and pricing changes in the power semiconductor industry.
• Incremental demand contributions from AI infrastructure for power semiconductor companies such as Yangjie and SICC.
• Commercialization progress of mass-produced silicon photonics chips and other optical interconnect technology platforms.