StarPower Semiconductor Ltd (603290) Report Interpretation

Overview

This conference-feedback update examines StarPower's near-term recovery prospects in new-energy vehicles and solar, its fully utilized SiC capacity, and the longer-term contribution expected from MCU products. Morgan Stanley maintains an Equal-weight rating and a Rmb110.00 target price.

Core views

Management expects revenue to improve sequentially in 2H26 as demand from new-energy vehicles and solar recovers from 1H26 levels. IGBT pricing has increased year to date, but the report notes that automotive-customer price increases have been relatively modest compared with other end markets. This implies that the recovery case is supported by improving end-market demand and pricing, but that automotive pricing remains comparatively restrained. SiC utilization remains tight. StarPower's current SiC device capacity is approximately 5,000 wafers per month and is effectively running at full load. Alongside its established markets, the company is developing high-voltage SiC/IGBT and GaN/MOSFET products for emerging applications including AI data centers, solid-state transformers, robotics and aerospace. The report therefore identifies capacity utilization and product expansion as important supports for future growth opportunities. MCUs are positioned as a later-stage growth driver rather than a material near-term contributor. Management expects industrial-grade MCU products to begin generating meaningful revenue in 2027, with automotive-grade MCU revenue following in 2028. The timing makes execution on industrial and automotive design wins important to the company's medium-term growth path. On profitability, foundry pricing increased in 3Q and should largely offset higher wafer costs. However, depreciation continues to exert meaningful pressure on gross margin, limiting the extent to which pricing relief translates into profitability. Morgan Stanley's model forecasts net revenue of Rmb4,770 million in 2026e, Rmb5,562 million in 2027e and Rmb7,004 million in 2028e, while ModelWare net income is projected at Rmb321 million, Rmb569 million and Rmb885 million, respectively. The valuation base case uses a residual income model. Morgan Stanley assumes an 8.2% cost of equity, comprising beta of 1.04, a 2.0% risk-free rate and a 6.0% risk premium; it also assumes an 80% payout ratio, 18.0% medium-term growth and 5.5% terminal growth. The report maintains an Equal-weight rating, a Rmb110.00 target price and stated upside of 28% from the Rmb85.69 closing price on September 17, 2026.

Analysis framework

The report combines management commentary from the China BEST Conference with operating indicators covering end-market demand, IGBT pricing, SiC utilization, product-roadmap timing and gross-margin pressures. It then presents Morgan Stanley financial estimates and values the company with a residual income model using explicit cost-of-equity, payout and growth assumptions.

Methodology notes

• Valuation methodsRIM (Residual Income Model)

  Residual income model

  The model estimates long-term equity value using returns generated above the cost of equity. Morgan Stanley applies an 8.2% cost of equity, 80% payout ratio, 18.0% medium-term growth rate and 5.5% terminal growth rate.

• Corporate Fundamentals and FinanceOperating and Financial Leverage Analysis

  Operating leverage and gross-margin analysis

  The report assesses whether higher revenue and foundry-price increases can improve profitability, while identifying depreciation as a continuing gross-margin headwind.

Asset mapping & comparison

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

• StarPower Semiconductor Ltd (603290.SH)

  Primary covered company; the report links its 2H26 recovery to NEV and solar demand, SiC utilization and expanding product applications.

  Strengths

  Effectively full SiC utilization; exposure to recovering NEV and solar demand; development for AI data centers, SST, robotics and aerospace; expected MCU contribution from 2027/28.

  Weaknesses

  Automotive IGBT price increases are relatively modest, and depreciation remains a meaningful gross-margin headwind.

  Comparison

  The report states that automotive IGBT price hikes have been more modest than those in other end markets.

  Risks

  Lower IGBT content per EV, insufficient revenue scale for operating leverage, and no technology breakthrough in automotive MCU.

Key data

• SiC device capacity~5,000 wafers/monthUtilization is effectively at full load.
• 2026e net revenueRmb4,770 millionMorgan Stanley estimate.
• 2027e net revenueRmb5,562 millionMorgan Stanley estimate.
• 2028e net revenueRmb7,004 millionMorgan Stanley estimate.
• 2026e / 2027e / 2028e ModelWare net incomeRmb321 million / Rmb569 million / Rmb885 millionMorgan Stanley estimates.
• Target priceRmb110.00Equal-weight rating; stated 28% upside.
• Closing share priceRmb85.69As of September 17, 2026.

Impact & implications

The report indicates that a 2H26 demand recovery and fully utilized SiC capacity could support StarPower's revenue progression, while MCU commercialization could add growth from 2027 onward. Margin improvement may remain constrained because depreciation continues to pressure gross margin despite foundry-price increases offsetting higher wafer costs.

Risks

• IGBT content per EV could decline.
• Margins could decline if revenue scale is insufficient to provide operating leverage.
• Automotive MCU development may not achieve a technology breakthrough.

What to watch

• The pace of sequential demand recovery in NEV and solar markets during 2H26.
• Whether SiC MOS products secure additional design wins from auto OEMs.
• Whether automotive MCU products secure additional design wins from auto OEMs.
• The extent to which foundry pricing offsets wafer-cost inflation and depreciation-related gross-margin pressure.
• The timing of meaningful industrial MCU revenue in 2027 and automotive MCU revenue in 2028.