Goldman Sachs sees SiC adoption and larger wafers supporting SICC growth, but maintains Neutral on valuation

Overview

This conference-takeaways report reviews SICC management’s outlook for silicon-carbide substrates. Goldman Sachs remains constructive on the company’s operating growth drivers but maintains Neutral because it considers valuation fair.

Core views

Goldman Sachs hosted SICC management at its Asia Leaders Conference in Hong Kong from 31 August to 2 September 2026. Management remained positive on earnings growth, citing continued adoption of silicon-carbide (SiC) materials in electric vehicles and AI data centers (AIDC), together with a move toward 8-inch and 12-inch SiC substrates. The report expects this product mix upgrade to improve blended average selling prices and gross margins because larger wafers carry higher margins. The EV opportunity is based on rising SiC adoption across a broader range of vehicle models, including more budget-oriented models, where SiC is associated with fast-charging capability. Management also identified increased use of SiC power semiconductors in AI data centers as an additional growth opportunity, alongside potential applications in AI glasses. Revenue growth is expected to come principally from rising SiC substrate shipments rather than price increases, supporting wider penetration across diversified end markets. Goldman Sachs forecasts SICC net income to grow at an 87% CAGR in 2026-28E. Its reasoning rests on four linked drivers: increasing SiC adoption across end markets; a shift toward 8-inch and 12-inch wafers; market-share expansion supported by R&D and continued capacity expansion; and gross-margin improvement from a better product mix and higher yields. The forecast table shows revenue rising from Rmb1,464.9 million in 2025 to Rmb2,851.1 million in 2026E, Rmb4,088.3 million in 2027E and Rmb5,683.6 million in 2028E; EBITDA is forecast to increase from Rmb147.5 million to Rmb880.0 million, Rmb1,476.3 million and Rmb2,368.4 million, respectively. EPS is projected to move from a Rmb0.43 loss in 2025 to Rmb0.99, Rmb2.01 and Rmb3.49 in 2026E-28E. Despite the operating outlook, Goldman Sachs maintains Neutral on fair valuation. Its 12-month Rmb104 target price is based on 32.2x 2029E P/E, derived from peers’ average relationship between trading P/E and forward fundamentals, specifically EPS year-on-year growth and operating profit margin. The report lists risks around the pace of the 12-inch substrate ramp, pricing declines for 6-inch and 8-inch substrates, and the pace of gross-margin enhancement.

Analysis framework

Goldman Sachs combines management commentary from the conference with forecasts for shipments, product mix, margins and earnings. It values SICC using a peer-derived forward P/E framework that relates valuation multiples to expected EPS growth and operating-profit-margin fundamentals.

Methodology notes

• Valuation methodsP/E and PEG Valuation

  Forward P/E valuation based on peer trading multiples and forward EPS growth and operating profit margin.

  The report applies a 32.2x 2029E P/E multiple to derive its Rmb104 target price, calibrating the multiple against peers’ valuation relative to forward growth and margin fundamentals.

• Industry AnalysisVolume-price decomposition

  Separating shipment-volume growth from pricing as revenue drivers.

  Management expects revenue growth mainly from higher SiC substrate shipments rather than price increases, while larger-wafer mix is expected to support pricing and margins.

Asset mapping & comparison

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

• SICC (688234.SS)

  Primary covered company; expected to benefit from SiC adoption in EVs and AI data centers and from a shift to larger substrates.

  Strengths

  Strong R&D, continuing capacity expansion, expanding end markets, and higher-margin 8-inch and 12-inch product mix.

  Weaknesses

  The report maintains Neutral on fair valuation despite the earnings-growth outlook.

  Comparison

  The target P/E multiple is derived from peers’ average relationship between trading P/E and forward EPS growth and operating profit margin.

  Risks

  Execution of the 12-inch ramp, substrate pricing pressure, and slower-than-expected gross-margin improvement.

Key data

• 12-month target priceRmb104.00Based on 32.2x 2029E P/E.
• Current priceRmb101.20Closing price as of 2 September 2026.
• Implied upside2.8%Target price versus current price.
• Net income growth+87% CAGR in 2026-28EGoldman Sachs expectation.
• Revenue forecastRmb2,851.1mn / Rmb4,088.3mn / Rmb5,683.6mn2026E / 2027E / 2028E, versus Rmb1,464.9mn in 2025.
• EBITDA forecastRmb880.0mn / Rmb1,476.3mn / Rmb2,368.4mn2026E / 2027E / 2028E, versus Rmb147.5mn in 2025.
• EPS forecastRmb0.99 / Rmb2.01 / Rmb3.492026E / 2027E / 2028E, versus negative Rmb0.43 in 2025.

Impact & implications

The report argues that expanding SiC applications and a transition to larger wafers could drive shipments, improve product mix and expand margins. However, Goldman Sachs considers these favorable operating trends reflected in its valuation framework and therefore retains Neutral.

Risks

• The 12-inch SiC substrate ramp could be slower than expected.
• Pricing declines in 6-inch and 8-inch SiC substrates could be greater than expected.
• Gross-margin improvement could be slower than expected.

What to watch

• The pace of SiC adoption in EVs, including penetration into lower-priced vehicle models.
• Growth in SiC power-semiconductor demand from AI data centers.
• Shipment growth, the mix shift toward 8-inch and 12-inch wafers, and yield-driven margin improvement.