The Crazy Intense Competition in SiC: The Prisoner's Dilemma and the Way Out

Recently, the news of the bankruptcy of SiC pioneer Wolfspeed and the rumor of Renesas exiting the SiC business have raised new concerns about the future of this material and device, which was regarded as having high entry barriers just a few years ago. Some industry insiders said that the price trend of SiC in the past few years has not just been cut in half; it could even be described as "sold at rock - bottom prices". The editor once joked that there is almost an SiC production line in every county in the Yangtze River Delta.

It only took a few short years for the SiC market to turn from a blue ocean to a highly competitive one. How did this happen? Let's take a look at the sharing of a senior SiC device practitioner.

The silicon carbide (SiC) market is like a hot and spicy hot pot. More than a hundred domestic brand companies are competing on the same stage with more than a dozen overseas leading enterprises for this "lucrative market" worth about $3.5 billion globally (approximately 25 billion RMB, data source: Yole). Among them, automotive - related applications (including on - board chargers, main inverters, air conditioners, and charging piles) account for 72% of the market share, while applications such as photovoltaic energy storage, server power supplies, and rail transit divide the remaining 21.5%. With an annual compound growth rate as high as 20%, it is estimated that the global market size will exceed $10.3 billion by 2030. However, there are hidden crises in this "hot pot feast": the price war is raging. Although domestic manufacturers have some bright spots in the global market share (domestic materials account for more than 30% globally), the overall domestic output value is only about $400 million, far behind the overseas output value of $3.6 billion.

Why is the SiC market so "bustling" yet so "involutionary"? Behind the price game, is it over - capacity, the chaotic situation in the early stage of the industry, or the short - sightedness of capital chasing profits? This article will start from the reasons for the SiC price war, analyze the essence of its "prisoner's dilemma", and propose five paths to break the deadlock in the future, aiming to light a guiding light for the industry.

The "Crime and Punishment" of the Price War: Why Is the SiC Market in a Vicious Cycle?

Over - capacity: Making up for Quality with Quantity

The production cycle of SiC substrates is incredibly long. The mainstream vapor - phase method takes three weeks to grow a 10 - centimeter crystal, which is the opposite of "good work takes time". Most domestic manufacturers adopt a heavy - asset model, investing heavily in growth furnaces in an attempt to make up for the quality short - board with scale. However, the SiC industry is still in its "adolescence" and far from mature. A large number of manufacturers are crowded on the "shore" and have not even ventured into the "deep sea", let alone sailed into the "blue ocean". As a result, over - capacity has sparked the first fire of the price war like a raging flood.

Imagine more than 100 domestic manufacturers as street vendors crowded in a narrow alley, each waving a "low - price promotion" flag, trying to snatch a limited number of customers. This not only squeezes the profit margin but also leads the entire industry into the wrong mindset of "more children, more strength in a fight".

Zero - sum Game: The "Prisoner's Dilemma" for Survival

The price war is essentially a zero - sum game. If you take a bigger share, I'll get less. SiC manufacturers, in order to survive, have all resorted to "price slashing" in an attempt to seize market share through low prices. However, this strategy of "killing one thousand enemies and losing eight hundred of your own" has trapped the entire industry in a prisoner's dilemma. Everyone knows that cooperation and win - win is the right way, but for the sake of immediate survival, no one dares to stop the "price - cutting" first.

This is like a group of explorers trapped on a desert island. In order to grab the remaining coconuts, they would rather trample on each other than sit down and distribute the resources. In the end, the coconuts are trampled and everyone goes hungry.

Bad Money Driving Out Good: The "Overdrawn Dividend" of Capital

The influx of Internet capital has once made the SiC industry a "pig on the wind". However, the short - sightedness of capital has also brought side effects. Some enterprises exchange market share through low - price dumping, while high - quality manufacturers are squeezed out of the race due to cost pressure. This is a classic case of "bad money driving out good". The short - sightedness of capital has overdrawn the long - term dividends of the industry, causing the SiC market to fall from the "wind" into a "whirlpool".

Even more ironically, some enterprises, in order to "tell a good story" to attract investment, have resorted to inflating production capacity and exaggerating technology, just like in the story of "The Emperor's New Clothes". As a result, the market bubble has burst, leaving a mess.

The "Tightening Spell" of Sunk Costs

The entry barriers to the SiC industry are extremely high: equipment investment of hundreds of millions of dollars, a long R & D cycle, and high trial - and - error costs make it difficult for enterprises to withdraw once they enter. Sunk costs are like a tightening spell, forcing manufacturers to "fight to the end" in the price war. After all, exiting means losing all the investment, while continuing to fight at least offers a glimmer of hope.

This is like a gambler who has lost a lot but refuses to leave the table, always thinking that the next bet will turn the situation around. Little does he know that the chips on the gambling table are already controlled by the dealer.

Not "Maneuvering" but "Losing Ground"

Some people joke that the price war in the SiC industry is like "Liu Bei's maneuvering" - giving up territory to gain a breathing space. However, this analogy is too optimistic. The so - called "maneuvering" of SiC manufacturers is more like "losing their armor and weapons". Low - price dumping not only sacrifices profits but also damages brand and technology accumulation. Some manufacturers even sacrifice quality in order to reduce prices, just like "practicing the Evil Sword Manual" - seemingly invincible in the short term but self - destructing the foundation in the long run.

Paths to Break the Deadlock: Five Ways from "Involution" to "Expansion"

The future of the SiC industry is not completely bleak. Facing the quagmire of the price war, domestic manufacturers need to break out of the "prisoner's dilemma" and find ways to break the deadlock from five dimensions: technology, products, market, standards, and policies.

Learn from Japan: Not Striving for the First, but Being the Only One

The secret to the success of Japanese enterprises lies in "not striving for the first, but being the only one". SiC manufacturers can learn from this idea, focus on niche markets, and build differentiated competitiveness. For example, for the OBC (on - board charger) market of new energy vehicles, develop high - efficiency and low - cost SiC modules; or in the field of photovoltaic energy storage, launch customized SiC devices to meet the needs of specific scenarios.

This is like in a hot pot restaurant. Instead of competing for the most expensive beef, you can focus on making a unique plate of spicy duck blood and still win the favor of diners.

Enrich the Product Portfolio: From Single Devices to System Integration

The market for single SiC devices is highly competitive with limited profit margins. Manufacturers can enrich their product portfolios and upgrade from "selling parts" to "selling systems". The specific paths include:

• Devices + Modules: Develop SiC power modules, integrating multiple devices to improve system performance.
• Devices + Chip and Circuit Design: Combine chip and circuit design to provide one - stop solutions.
• Chip and Circuit Integration Design: Cooperate closely with customers to develop customized SiC drive and control systems.

This is like upgrading from selling flour to selling cakes. Not only is the added value higher, but it can also lock in customer loyalty.

Upgrade the Track: From SiC to Next - Generation Materials

Although SiC is currently a star, next - generation wide - bandgap semiconductor materials (such as gallium oxide (Ga2O3) and aluminum nitride (AlN)) have emerged. Domestic manufacturers should increase R & D investment, explore the applications of new materials, and optimize the SiC production process to improve crystal quality and yield. For example, develop more advanced crystal growth technologies to shorten the production cycle and reduce costs.

This is like in the era of smartphones. Apple not only optimizes the iPhone but also lays out AR glasses in advance. SiC manufacturers need to deeply cultivate the existing track while laying a foundation for the future.

Establish Industry Standards: Build a Moat

The lack of industry standards is one of the major incentives for the SiC price war. Domestic manufacturers should cooperate with upstream and downstream enterprises to establish standards for SiC devices, modules, and applications to regulate market competition. For example, establish unified specifications for key indicators such as the size and defect rate of SiC substrates; and introduce performance certification standards for SiC modules in new energy vehicle applications.

Standards are like a moat. They can not only protect high - quality enterprises but also keep "bad money" out. Imagine if there were a "Michelin Guide" for the industry, who would dare to use "unqualified products" to deceive customers?

Administrative Regulation: From "Wild Growth" to "Orderly Competition"

One of the root causes of market disorder is the lack of effective regulation. The government can guide the healthy development of the industry through the following means:

• Reasonable Restrictions on Imports and Exports: Use tariffs or quotas to restrict the import of low - price dumped SiC products and protect domestic manufacturers.
• Control Market Scale: Avoid blind expansion of production and guide enterprises to focus on technological upgrading rather than scale expansion.
• Reduce or Withdraw Subsidies: Gradually reduce direct subsidies to the SiC industry to prompt enterprises to improve their "self - hematopoietic" ability.
• Punish Dumping: Regulate and punish malicious low - price dumping behavior to maintain market order.

This is like putting a rein on a runaway horse, neither stifling its vitality nor guiding it in the right direction.

The Endgame: Sustainable Development from "Burning Money" to "Self - hematopoietic"

The endgame of the SiC industry is not "winner takes all" but "survival of the fittest". The current heavy - asset investment and price war are just the "by - products" of the short - sightedness of capital. In the future, SiC enterprises need to return to the essence of business and achieve sustainable development through technological innovation and efficient operation.

Technology Is King: The Cornerstone of Core Competitiveness

Enterprises with core technologies can stand firm in the SiC market. For example, ST (STMicroelectronics) occupies 27.5% of the market share with an output value of $1.1 billion, thanks to its technological barriers. Domestic manufacturers need to increase R & D investment to improve the quality of SiC substrates, device performance, and system integration capabilities.

Operation Is Fundamental: From "Burning Money" to "Self - hematopoietic"

Efficient operation is the way for enterprises to "self - hematopoietic". SiC manufacturers should optimize supply chain management to reduce production costs; at the same time, improve market bargaining power through differentiated products and brand building. Only when "income exceeds expenditure" can enterprises get out of the quagmire of the price war.

Farewell to Speculation: The Dust of History Will Settle

Enterprises that rely on speculation may gain a temporary advantage through low prices, but they will eventually become "dust in history". Only enterprises that are down - to - earth, focus on technology and the market can laugh at the end of the "long - distance race" in the SiC industry.

Charts and Data: Let the Numbers Speak

The following are the core data of the SiC market for readers to get an overview of the industry:

Chart 1: Application Distribution in the SiC Market (2025), Data Source: Yole, Estimated for 2025

Chart 2: Major Players in the Global SiC Market (2025), Data Source: Yole, Estimated for 2025

Data Source: Yole, Estimated for 2025. Chart 3: Slowdown in SiC Growth (2025 - 2030). Since 2024, the production capacity of the automotive industry has slowed down, and the price war in China has continued. The market is in an adjustment period.

Conclusion: From the "Prisoner's Dilemma" to the "Win - win Blue Ocean"

The price game in the SiC industry is both the growing pain in the early stage of the industry and a microcosm of capital chasing profits. Facing challenges such as over - capacity, zero - sum games, and bad money driving out good, domestic manufacturers need to be guided by the "uniqueness" spirit of Japanese enterprises, break out of the "prisoner's dilemma" through enriching product portfolios, upgrading technological tracks, establishing industry standards, and relying on administrative regulation, and sail into the "win - win blue ocean".

The future of the SiC market belongs to enterprises with both strong technological capabilities and excellent operational capabilities. Speculators will eventually be eliminated by history, while down - to - earth "long - distance runners" will have their moment of glory on the $10.3 - billion track.

This article is from the WeChat official account "Semiconductor Industry Observation" (ID: icbank), author: Editorial Department, published by 36Kr with permission.