AI data centers are a new driver for the SiC industry, but the near-term contribution may be below optimistic expectations

Overview

This report updates J.P. Morgan's view on the silicon carbide industry across AI data centers and automotive applications. The core view is that AI is a positive factor for the SiC industry, especially benefiting from the migration of data center power from AC to HVDC architectures, as well as stronger demand for high-efficiency, high-power-density devices in UPS, SST, and server PSUs. However, the absolute contribution and share of data centers in overall SiC device TAM may be lower than bullish market expectations. By contrast, new energy vehicles, especially the migration to 800V platforms, remain the main foundation of SiC demand.

Core views

The report believes AI-related demand has already led to longer SiC MOS lead times and premiums for high-spec products, but even under relatively optimistic assumptions, the 2028 data center SiC device TAM contribution is only about $400 million to $480 million, and may be even lower if AC and HVDC are used together. Global SiC device TAM is expected to be about $4.0 billion to $4.5 billion in 2026, mainly driven by NEVs and the migration to 800V. The data center contribution rate may rise from low single digits currently to high single digits in two to three years, but this may still be below the optimistic 20% to 30% expectation. Along the supply chain, automotive SiC MOS prices are still falling, and 8-inch SiC wafer prices still have room to decline; strong demand and price competition coexist.

Analysis framework

The report mainly uses industry research, supply-chain lead-time and price tracking, assumptions for data center power installations, SiC unit value estimates, EV penetration rates, and SiC device TAM forecasts to decompose the incremental contribution of AI and automotive applications to the SiC industry.

Methodology notes

• Industry TAM estimationData center power installations multiplied by SiC unit value

  Estimate data center SiC TAM by calculating the SiC content value required for 1MW of HVDC data center power build-out.

  The report assumes that 1MW of HVDC data center power build-out corresponds to about $5.0k to $6.0k or slightly higher in SiC value, and combines this with the forecast of 80GW of new AI data center installations in 2028 to derive a potential TAM contribution of about $400 million to $480 million; if HVDC penetration is below 100%, the actual contribution is smaller.

• Demand structure assessmentSplitting EV and AI dual drivers

  Distinguish the foundational TAM already formed by new energy vehicles from the incremental TAM from AI data centers.

  The report emphasizes that SiC device TAM has already been substantially established by EV demand. AI data centers are an important incremental driver, but their contribution should be judged against the overall TAM size rather than on sentiment or order tightness alone.

• Supply-chain price trackingMonitoring wafer and MOS prices and lead times

  Assess supply-demand conditions by tracking 6-inch and 8-inch wafer prices, as well as lead times and price changes for automotive and AI SiC MOS.

  The report evaluates near-term supply-demand tightness and medium-term pricing pressure using Chinese supplier quotes to major customers, supplier capacity utilization, changes in lead times from 26 weeks to 39 weeks or 52 weeks, and SiC MOS price differences across applications.

Asset mapping & comparison

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

• United Nova - A (688469.SS)

  A leading Chinese SiC MOS supplier, benefiting from automotive and potential AI server demand.

  Strengths

  SiC MOS chips and module revenue is expected to rise from Rmb1.5bn in 2025 to Rmb3.0bn in 2026; the company has already sent samples of 8-inch SiC MOS to international AI server customers for certification; it has the ability to mass-produce and quickly expand 8-inch SiC capacity.

  Weaknesses

  Earnings and pricing may still be affected by price declines in automotive SiC MOS and competition from Chinese suppliers.

  Comparison

  Compared with wafer suppliers, United Nova benefits more directly from SiC MOS demand growth and AI customer certification progress.

  Risks

  Customer certification falling short of expectations, continued price declines in automotive SiC MOS, intensifying competition, and slower-than-expected capacity ramp-up.

• SICC - A (688234.SS)

  A leading Chinese supplier of 6-inch and 8-inch SiC wafers, benefiting from higher SiC adoption but under pressure from price declines.

  Strengths

  Has a leading position in 6-inch and 8-inch SiC wafers, and 8-inch wafers may see significant y/y expansion this year; may benefit in the medium to long term from data center and advanced packaging-related applications.

  Weaknesses

  8-inch SiC wafer prices are still declining, and the report believes the market may have mistaken expectations for wafer price increases.

  Comparison

  Compared with the SiC MOS device segment, the wafer segment is more directly exposed to excess supply, price declines after yield improvements, and customer price pressure.

  Risks

  Larger-than-expected declines in 8-inch wafer prices, customers demanding a narrower price gap between 6-inch and 8-inch products, and excess industry capacity limiting price recovery.

• Rohm (6963.T)

  A supplier of SiC devices and modules, benefiting from xEV inverter and AI server application growth.

  Strengths

  FY26 plans to bring SiC revenue close to JPY55bn, with device and module revenue expected to grow 55% y/y; AI server SiC MOS has already scaled in FY25 and FY26 plans to raise revenue share to 10%; 8-inch wafer mass production is planned for FY26.

  Weaknesses

  The company needs device and module growth to offset the loss of external 6-inch wafer sales business; the profitability recovery target is FY28.

  Comparison

  Compared with domestic Chinese suppliers, Rohm has advantages in international customers and technology platforms, but it also faces pressure to adjust its regional revenue mix and improve cost efficiency.

  Risks

  8-inch mass-production progress, fifth-generation MOS yield improvement, regional shifts in xEV demand, and uncertainty around FY28 profitability recovery.

• Automotive SiC MOS market

  The core foundational demand for the current SiC device TAM, mainly driven by EVs and 800V platform migration.

  Strengths

  China SiC EV shipments and penetration are rising rapidly, and price declines are pushing SiC into lower-priced vehicle models.

  Weaknesses

  Automotive inverter SiC MOS prices are still falling quickly, and whether they stabilize in 2027 depends on supply-side competition.

  Comparison

  Compared with AI SiC MOS, automotive SiC MOS is cheaper and faces more obvious price pressure, but the market is larger and the demand base is more mature.

  Risks

  More Chinese suppliers passing automotive certification and continuing to pressure prices, while a decline in SiC die count per vehicle weakens part of the value growth.

• Data center SiC market

  A new source of SiC demand created by upgrades to AI power architectures.

  Strengths

  AI customer orders are strong, and the migration to HVDC architectures and higher power-density requirements are increasing the application value of SiC in UPS, SST, and PSU.

  Weaknesses

  Even under optimistic assumptions, the 2028 data center SiC TAM contribution may still be only several hundred million dollars, and its share of overall SiC device TAM may be below bullish expectations.

  Comparison

  Compared with the EV market, the data center SiC market is smaller currently but has stronger growth and sentiment elasticity; compared with automotive applications, AI SiC MOS is higher priced and has longer lead times.

  Risks

  HVDC penetration coming in below expectations, AC and HVDC mixed architectures reducing SiC demand, and the market overcounting a 20% to 30% TAM contribution.

Key data

• Assumption for new AI data center power installations in 202880GWJ.P. Morgan team forecast used to estimate data center SiC TAM.
• SiC value for 1MW HVDC data center build-outAbout $5.0k-$6.0k or slightly higherBased on power module topology and device pricing industry research.
• Potential data center SiC device TAM contribution in 2028About $400mn-$480mn, and possibly lowerThis estimate assumes 100% HVDC penetration; if AC and HVDC are mixed, the actual contribution is below this range.
• 2026 global SiC device TAM viewAbout $4.0bn-$4.5bnThe report believes this scale is mainly driven by EVs and the migration to 800V.
• Yole Group global SiC device TAM forecastAbout $3.7bn in 2025, about $4.6bn in 2026, up 25% y/yGrowth is mainly from EV 800V migration.
• AI SiC MOS lead time52 weeksThe report says AI customer orders are strong and qualified capacity is temporarily limited.
• Premium AI SiC MOS pricingAt least 2x automotive inverter SiC MOSComparison based on the same die size and Rds(On) specification.
• 6-inch SiC wafer priceAbout Rmb1.5kBasically stable since early 2026 and below the cash cost of some suppliers.
• 8-inch SiC wafer price outlookRmb3.0k-Rmb4.0k by end-2026; Rmb2.5k-Rmb3.5k in 2027The report expects continued price declines driven by improved yield, efficiency gains, and increased effective supply from Chinese vendors.
• Estimated China SiC EV shipments2.5 million units in 2025; 4.0 million units or more in 2026Excluding Tesla, implying y/y growth of about 60% or more in 2026.
• China SiC EV penetrationMid-teens in 2025; low-20% range in 2026Price declines are pushing SiC into EV models priced around Rmb150k.
• United Nova SiC MOS revenue targetRmb1.5bn in 2025 to Rmb3.0bn in 2026The company mentioned potential growth, corresponding to revenue share rising from about 18% to 28%.
• Rohm SiC revenue planSlightly above JPY40bn in FY25; slightly below JPY55bn in FY26J.P. Morgan estimates that device and module revenue will grow about 55% y/y in FY26.

Impact & implications

From an investment perspective, AI data center demand can increase market attention on the SiC industry and create near-term lead-time extensions and price premiums for high-spec SiC MOS, but valuation and earnings expectations should return to the realities of TAM contribution and supply-chain competition. United Nova is seen as an important beneficiary of strong SiC MOS demand in China, given its volume production capability and 8-inch expansion capacity; SICC has a leading position in 6-inch and 8-inch SiC wafers, but the report remains cautious on the 8-inch wafer price outlook and believes market expectations may be overly optimistic. For Rohm, AI server SiC MOS has already scaled in FY25, FY26 plans to raise revenue share further, and the company is advancing 8-inch mass production and its fifth-generation MOS platform to improve yield and productivity.

Risks

• The actual contribution of AI data centers to SiC device TAM may be lower than market expectations, especially if HVDC penetration is below 100%.
• 8-inch SiC wafer prices may continue to fall, making it difficult for suppliers to raise prices.
• Automotive SiC MOS prices may remain under pressure through 2027 as more Chinese suppliers obtain vehicle certification.
• Excess industry capacity may limit the recovery in 6-inch wafer prices.
• SiC MOS product iterations that reduce die count per module may partially offset value growth from EV shipment growth.
• At the company level, there are risks of weaker-than-expected customer certification, capacity ramp-up, yield improvement, and profitability recovery.

What to watch

• Whether HVDC penetration in AI data centers and the assumption of 80GW of new power installations are achieved.
• Whether AI SiC MOS lead times remain near 52 weeks and whether the price premium over automotive SiC MOS continues.
• The actual magnitude of 8-inch SiC wafer price declines by end-2026 and in 2027.
• Whether China SiC EV shipments reach 4.0 million units or more in 2026 and whether penetration rises to the low-20% range.
• Progress in United Nova's certification of 8-inch SiC MOS with international AI server customers.
• The balance between SICC's 8-inch wafer expansion, yield improvement, and pricing pressure.
• Rohm's FY26 8-inch wafer mass production, fifth-generation MOS introduction, and FY28 profitability recovery path.