Power semiconductors, frantic capacity expansion

Currently, the power semiconductor industry is witnessing a seemingly contradictory landscape: on one hand, SiC capacity absorption, substrate price cuts, and pressure on some enterprises; on the other hand, manufacturers including Infineon, Xinxian Integration, STMicroelectronics, and ON Semiconductor continue to ramp up production expansion, with MOSFET and IGBT even showing price hike signals.

This is not a failure of industry judgment, but a sign that power semiconductors have entered a new structural cycle: low-end capacity is overabundant while high-end effective capacity is insufficient; automotive demand fluctuates, and demand from AI and power grids takes over; competition centered on individual devices is upgrading to competition in system-level delivery capabilities.

New Energy Vehicles Remain the Fundamental Market Base

In the past few years, the most critical demand driver for power semiconductors has been new energy vehicles. Although the growth of new energy vehicles has slowed down somewhat, this demand still exists. However, the growth logic has shifted from incremental expansion to high-voltage adoption. In the 400V platform era, silicon-based IGBTs can still cover a large number of mainstream vehicle models; but when 800V or even 1000V becomes a fast-charging selling point for mid-to-high-end models, the value of SiC MOSFETs has evolved from a performance upgrade component to a foundational component for system efficiency and charging experience.

Data from the IEA's Global EV Outlook 2026 shows that global electric vehicle sales exceeded 20 million units in 2025, accounting for about a quarter of new car sales; the figure is expected to reach 23 million units in 2026, making up roughly 28% of total new car sales. Meanwhile, the IEA notes that the first batch of 1000V models emerged in 2025. While the stock of vehicles compatible with ultra-fast charging above 250kW still accounts for less than 5% of the total, their sales are growing alongside the expansion of ultra-fast/megawatt-level charging facilities.

The automotive sector remains the most stable fundamental market base for power devices.

Related research from Yole also points out that in the coming years, the automotive sector will continue to be the main driving force for power SiC growth, with 800V BEVs becoming a key driving factor; at the same time, AI data centers, renewable energy and other fields are emerging as new sources of growth.

This explains why the industry presents a "seemingly contradictory" state: some segments of the SiC market are cooling down, while 8-inch SiC is heating up; there is no shortage of low-end devices, but high-end automotive-grade devices remain tight; overall production expansion is extensive, yet the capacity that can be verified by customers, ensure stable supply, and integrate into main drive and AI power systems is still insufficient.

The Power Device Cycle Reignited by AI

If the biggest narrative of power semiconductors in the past was new energy vehicles, a new variable has become increasingly hard to ignore after 2026: AI data centers.

In the AI industry, the most discussed topics in the past were GPUs, HBM, advanced packaging, optical modules, and switching chips. However, as AI clusters grow larger, problems are extending to more fundamental levels: where does the electricity come from? How does it enter the data center? How does it reach the cabinet? How does it get into the server? How to deliver it to the GPU with lower energy loss?

At this point, power devices are no longer inconspicuous power components, but the foundation for the continued expansion of AI infrastructure.

The stronger the AI computing power, the higher the requirements for power supply efficiency, power density, and thermal management. Traditional server power supplies can operate in a relatively stable power range, but AI servers experience more drastic load changes and higher cabinet power density, requiring power systems to become more efficient, compact, and reliable.

Recent research on the next-generation AI data center power supply architecture also points out that AI loads are pushing up data center power demand, transient current, and thermal pressure, exposing the limitations of the traditional 48V cabinet architecture, low-voltage AC power distribution, and power frequency transformer interfaces.

Therefore, the boost that AI brings to power semiconductors is far more than simply purchasing more MOSFETs or PMICs. It may reshape the entire power supply architecture of data centers.

From server power supplies, to cabinet-level power supplies, to data center-level medium-voltage DC, solid-state transformers, and high-voltage DC/DC conversion, power semiconductors are evolving from "basic components in electronic systems" to "key variables that determine whether AI infrastructure can continue to expand."

This is why price hike expectations for products such as MOSFETs, IGBTs, and PMICs have re-emerged since the beginning of this year. A report by CLP Securities mentions that the explosive demand from AI data centers is occupying 8-inch mature process capacity, and the demand for high-voltage MOSFETs and power management MOSFETs per AI server has increased, exacerbating the shortage of 8-inch capacity; manufacturers including Nce Power, Jiejie Microelectronics, and Xinxian Integration have all implemented price adjustments to varying degrees.

The development story of power semiconductors has thus been rewritten.

In the past, it was part of the new energy vehicle supply chain; now, it is becoming a fundamental capacity that AI, automotive, energy storage, power grid, and industrial power sectors are all competing for.

Defensive Counterattack by Global Industry Leaders

Against this backdrop, it can be observed that many leading power semiconductor enterprises are ramping up production expansion.

On July 2, 2026, Infineon held a grand opening ceremony, announcing the official accelerated launch of its largest single investment in history—the Smart Power Fab in Dresden, Germany. This is the factory site with the largest single investment (5 billion euros) in Infineon's history, receiving nearly 920 million euros in subsidies from the German government under the EU Chips Act. After the factory is put into operation, it will directly double the 300mm power semiconductor and analog/mixed-signal chip capacity at Infineon's Dresden base, creating the world's largest production hub for smart power devices and analog chips.

At the same time, in response to the surge in AI orders, Infineon also added to its budget in the middle of the year. In recent financial report and market communications, senior executives from Infineon's Greater China region and global headquarters revealed that due to the far-exceeding-expected demand for AI server power components (such as those adapted to NVIDIA's next-generation GB300 and other architectures), its AI-related business revenue is expected to reach 1.5 billion euros in fiscal year 2026 (only 700 million euros in fiscal year 2025), and is on track to hit 2.5 billion euros in fiscal year 2027.

Meanwhile, Infineon is also restructuring its business organization. Starting from the fourth quarter of fiscal year 2026, Infineon will adjust its original four business divisions—Automotive (ATV), Green Industrial Power (GIP), Power & Sensor Systems (PSS), and Connected Secure Systems (CSS)—into three business divisions: Automotive, Power Systems, and Edge Systems. Among them, the newly established Power Systems will integrate non-automotive power-related businesses such as AI data center power supplies, power grid infrastructure, industry, and communications. This adjustment means that Infineon is further separating power semiconductors from traditional automotive and industrial applications, positioning them independently as a core growth platform for AI, power infrastructure, and energy transition.

STMicroelectronics is building a 200mm SiC integrated manufacturing base in Catania, Italy, with a total estimated investment of about 5 billion euros and around 2 billion euros in support from the Italian government; the project is scheduled to start production in 2026, and upon full production in 2033, its maximum capacity can reach 15,000 wafers per week.

ON Semiconductor is also advancing end-to-end SiC manufacturing capabilities in the Czech Republic, planning a multi-year investment of up to 2 billion euros covering silicon and silicon carbide wafer manufacturing, polishing, and epitaxy processes.

These projects indicate that global power industry leaders are still betting on SiC and advanced power devices, and have not stopped investing due to the short-term capacity digestion pressure on SiC. In the past, the automotive sector was the most important narrative for the power business of global power leaders; now, the importance of AI data centers, power grids, and power infrastructure is rising rapidly. What they value is not the new energy vehicle sales volume in a single quarter, but the electrification, digitalization, and high-voltage transformation of the entire energy system over the next decade.

In the first half of 2026, more than 20 global power giants including Infineon, TI, and STMicroelectronics faced capacity overload due to demand from AI and power grids, launching two rounds of "price hike waves" on April 1 and July 1 consecutively (some AI power components even reportedly have lead times of 40 weeks with staggering price increases).

Domestic Power Semiconductors Enter the Effective Capacity Construction Phase

Turning to the domestic market, China simultaneously has the world's largest new energy vehicle market, the fastest-iterating AI hardware ecosystem, a huge energy storage and photovoltaic industry chain, and rapidly growing robotics and industrial automation scenarios.

All these industries share a common feature: high-speed iteration. Chinese automakers roll out several model updates a year, and 800V platforms are rapidly penetrating into lower-tier markets; the power supply architecture for AI servers and intelligent computing centers is still evolving; energy storage PCS, charging piles, robot actuators, and industrial power supplies are all pursuing higher efficiency, smaller size, and lower cost.

This is a perfect window of opportunity for domestic power manufacturers, but it is no longer just about domestic substitution—not just replacing an overseas chip, but participating in customer definition faster, completing verification more quickly, adjusting packaging and module solutions sooner, and driving down costs at a faster pace.

On June 11, Xinxian Integration officially released an announcement stating that the company plans to jointly invest with relevant parties in Shaoxing to build a 12-inch mixed-signal chip production line with a monthly capacity of 50,000 wafers. As the company's fourth-phase project, the total planned investment is about 20 billion yuan, of which the company contributes 3.012 billion yuan, holding a 25.1% stake.

It can be seen that Xinxian Integration is not simply manufacturing a single type of device, but moving towards a "system-level foundry platform": 8-inch silicon-based, 12-inch silicon-based, 6-inch/8-inch SiC, high-voltage BCD, MEMS, module packaging, application verification, and reliability testing are all within its business scope. The management of Xinxian Integration previously proposed three growth curves: silicon-based power devices, SiC MOSFET chips and modules, and high-voltage high-power BCD analog ICs, with revenue expected to exceed 10 billion yuan in 2026.

According to disclosures from Xinxian Integration, in 2025 the company has established three major production lines: 8-inch silicon-based, 12-inch silicon-based, and 6/8-inch silicon carbide; its 8-inch silicon-based capacity is 170,000 wafers per month, 12-inch silicon-based capacity is 30,000 wafers per month, and 6-inch SiC MOSFET capacity is 8,000 wafers per month. The company also stated that in 2026, the capacity utilization rate of 8-inch silicon-based and 6-inch SiC is expected to remain above 90%, and the capacity utilization rate of 12-inch silicon-based is expected to reach over 80%.

Xinxian Integration's acquisition of Xinxian Yuezhou also sends a strong industrial signal: through full holding of Xinxian Yuezhou, the company can manage the 8-inch silicon-based capacity of 100,000 wafers per month from the parent company and 70,000 wafers per month from Xinxian Yuezhou in an integrated manner, with a focus on supporting businesses such as SiC MOSFETs and high-voltage analog ICs.

Xinxian Integration is not an isolated case; domestic power semiconductors as a whole are entering the "effective capacity construction phase."

The 8-inch SiC power device chip project of Shilan Jihong has a total planned investment of 12 billion yuan, to be built in two phases; the first phase has an investment of 7 billion yuan, with a planned annual output of 420,000 wafers (35,000 wafers per month) of 8-inch SiC power device chips. The production line was launched on January 4, 2026, with capacity ramping continuing from 2026 to 2028, and full production expected in 2029; the second phase plans to add an annual output of 300,000 wafers (25,000 wafers per month), ultimately forming a total monthly capacity of 60,000 8-inch SiC wafers across the two phases.

According to the minutes of Times Electric's investor relations activity in March 2026, the revenue of the company's semiconductor subsidiary in 2025 was 5.532 billion yuan, a year-on-year increase of 26.72%; among which, IGBT revenue was 4.853 billion yuan, a year-on-year increase of 29.88%. The company also mentioned that the Yixing production line has been operating at full capacity continuously since the chip line achieved full production at the end of June 2025. According to investor interaction information in June 2026, Times Electric's third-phase Zhuzhou SiC production line was put into operation at the end of 2025 and is currently in the process of capacity ramping, and the company's automotive-grade SiC products have been delivered in small batches.

For Yangjie Technology, the company's 2025 annual report mentions that its first SiC automotive-grade power semiconductor module packaging project has been completed and put into operation. In the investor relations record of April 2026, Yangjie Technology also stated that core projects such as the 8-inch wafer project and the automotive-grade power chip manufacturing project are expected to be put into operation successively in the second half of 2026, while the company's automotive electronics, AI data center, and energy storage businesses are all strategic priority directions.

The investor relations record of Jingsheng Electronics in May 2026 shows that its subsidiary Zhejiang Jingrui Electronic Materials is accelerating the commissioning of its project with an annual output of 600,000 8-inch SiC substrates, and has started the construction of new-phase infrastructure; meanwhile, the 8-inch silicon carbide substrate factory in Malaysia is expected to be completed and put into operation by the end of 2026.

For Tianyue Advanced, a report in March 2026 shows that the company proposed a capacity plan of 960,000 wafers as early as 2024 and implemented it in stages. Its 8-inch products have established a stable large-scale supply system and maintain long-term cooperation with leading global power device enterprises.

Tianke Heda also disclosed in reports related to its IPO materials that it has achieved large-scale production of 2-inch to 8-inch SiC substrates, and has successfully developed 12-inch SiC substrate products.

Behind this is not simply scaling up, but complementing platform capabilities. In the past, China's power semiconductor industry long faced a problem: breakthroughs could be made in individual devices, but the overall system capabilities were not complete. Now, applications such as new energy vehicles, AI servers, robots, energy storage, photovoltaic inverters, and charging piles are all forcing power manufacturers to transform from "selling a single chip" to "providing a set of verified power electronic solutions."

Industrial Contradiction: Oversupply on One Hand, Price Hikes on the Other

The most easily misjudged point in this round of power semiconductor cycle is directly equating "production expansion" with "prosperity."

In fact, not all segments of the industry are performing well.

TrendForce judges in its 2026 Global SiC Power Device Report that the SiC industry is entering a 2-3 year capacity digestion phase. After the concentrated release of demand superimposed with short-term fluctuations, the industry is shifting from technology-driven to cost-driven, and mid-to-low-end vehicle models will become a key variable for increasing SiC penetration.

SiC has passed the stage where "as long as the performance is good, it can be sold at a high price." Going forward, automakers will pay more attention to costs. Especially in mid-to-low-end vehicle models, whether SiC can penetrate from high-end vehicles to mainstream models depends on whether the entire industrial chain can drive down costs.

Therefore, power semiconductors will face long-term structural differentiation in the future: ordinary 6-inch SiC capacity may require digestion, but high-yield 8-inch SiC remains scarce; competition for ordinary silicon-based power devices is fierce, but automotive-grade IGBT, MOSFET, and module capabilities still have barriers; low-end consumer and industrial control markets are price-sensitive, but AI servers, main drive inverters, energy storage PCS, and high-voltage fast charging place more emphasis on reliability and supply stability; the threshold for individual chips is declining, but the threshold from chips to modules and then to system verification is rising.

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