Overview: A New Demand Cycle for Power Semiconductors

China Securities Construction Investment (CSC) argues in a new research note that the explosive buildout of AI data centers (AIDC), together with continued growth in new energy vehicles, has pushed power semiconductors into a new demand cycle. Since 2026, the combination of AIDC demand and EV increments has triggered a wave of price increases across the sector. CSC’s core technical conclusion is that third-generation power devices, represented by silicon carbide (SiC), are well matched to the high-voltage DC evolution of AIDC power architectures. As a result, SiC penetration is rising in solid-state transformers (SST), high-voltage direct current (HVDC) systems, power supply units (PSU), and solid-state circuit breakers.

Price Increases Spread Across the Supply Chain

According to the note, Infineon, Texas Instruments, onsemi, and STMicroelectronics collectively announced price increases in the first half of 2026, with domestic Chinese manufacturers gradually following. In the second half, demand growth combined with higher raw material and energy prices produced another round of increases. From July to September, Infineon, STMicroelectronics, Texas Instruments, and onsemi adjusted prices again. Domestic suppliers also moved: Silan Micro planned a full-product-line increase from July starting at 15%; Yangjie Technology had already adjusted prices twice within the year by roughly 10%–15%; and CR Micro and NCE Power issued price increase notices. About 20 global analog and power semiconductor companies raised prices from July, with increases of roughly 10%–25%.

The 800V DC Transition Raises the Technical Bar

Data centers have rigid demand for power semiconductors because IT equipment such as servers and storage units use low-voltage DC, while the grid supplies high-voltage AC. Power devices convert and manage voltage across the entire chain, from grid-level high voltage down to 48V, 12V, and even below 1V. The 800V DC upgrade is driven by AI rack power rising from the 100kW class toward 500kW to 1MW. The purpose is to use a higher-voltage DC backbone, fewer conversion stages, and higher output per unit volume to overcome the physical limits of traditional low-voltage AC solutions in copper consumption, line loss, footprint, and system complexity.

CSC cites Nvidia’s whitepaper in describing two stages. In the first stage, the architecture moves from a traditional 480V AC intermediate bus to sidecar and 800V DC racks, relocating the PSU that handles AC/DC conversion out of the compute rack into the sidecar. Infineon has disclosed that 800V DC racks require PSU power devices to move from 650V to 1200V withstand voltage. In the second stage, UPS and sidecar multi-stage conversion are eliminated, and a single-stage SST directly outputs 800V DC to the rack. The SST must convert 13.8–35kV high-voltage AC to 800V DC using high-frequency, modular design, imposing far higher requirements on high-frequency/high-voltage performance, switching loss, and power density than traditional transformers.

SiC Becomes the Enabling Material for SST and HVDC

In the SST power architecture, SiC devices become necessary. SST uses one-step AC/DC conversion to solve the long conversion chain, low efficiency, large footprint, and slow deployment of traditional solutions, and is widely regarded as the final solution for the AIDC 800V upgrade. Traditional silicon IGBTs struggle to meet SST requirements because of insufficient withstand voltage and relatively high switching losses. SiC devices can achieve higher switching frequencies, lower switching losses, superior thermal performance, and compact packaging forms that traditional silicon cannot achieve. SiC is therefore an ideal choice for the high-voltage side of the power supply chain, represented by SST.

Market Growth: Data Centers Are the Fastest Marginal Segment

From a downstream perspective, new energy vehicles remain the largest existing market and demand base for power semiconductors. Yole expects the global power semiconductor market to grow from $29.4 billion in 2026 to $41.3 billion in 2031, a CAGR of 7.1%. The automotive segment is expected to exceed $20 billion in 2031, accounting for nearly half. AIDC is smaller than automotive but is the fastest-growing marginal market, driven by the 800V power architecture upgrade. TechInsights expects the data center power semiconductor market to grow from $5.0 billion in 2026 to $14.3 billion in 2031, a CAGR of 24.6%.

The note also cites TechInsights’ forecast that average power semiconductor BOM per rack will rise from $2,300 in 2025 to $7,600 by 2031 as rack power density increases. Technology evolution is the core driver, including higher-power 48V architectures, HVDC solutions starting in 2027, and broader use of SiC and GaN devices in data center power systems. Navitas expects AIDC 800V power architecture penetration to reach 80% by 2030. SiC penetration is also rising faster than the overall power device market: Frost & Sullivan data show global SiC power device penetration rising from 1.4% in 2020 to 6.5% in 2024, with 20.1% expected by 2029, and SiC CAGR from 2025 to 2029 is expected to significantly exceed the overall power device growth rate.

Supply Chain Structure and Competitive Landscape

The SiC power device supply chain includes upstream SiC substrates and epitaxy, midstream device manufacturing, and downstream applications in new energy vehicles, AI data centers, and other fields. Substrates carry high value, accounting for about 30%–40% of total SiC device value; epitaxy accounts for about 20%–30%; device design and manufacturing together account for about 30%–40%. The manufacturing process includes substrate production, epitaxial growth, wafer fabrication, and packaging. SiC powder is grown into an ingot in a high-temperature furnace, then cut, ground, and polished into a substrate; a controlled SiC single-crystal layer is grown on the substrate to form an epitaxial wafer; lithography, ion implantation, and metallization form device tapeout; and dicing and packaging produce power devices or modules.

The competitive landscape is characterized by integrated overseas leaders and accelerating Chinese challengers. Domestic upstream players include substrate companies such as Tianyue Advanced, TankeBlue, and Jingsheng Mechanical & Electrical, and epitaxy companies such as Epiworld and Tianyu Semiconductor; some have already advanced 8-inch product batch delivery. In midstream and downstream SiC devices and modules, Xinlian Integrated focuses on wafer foundry, Silan Micro adopts an IDM model, and StarPower combines Fabless and IDM approaches. Overseas, SK Siltron and Coherent are SiC material suppliers, while STMicroelectronics, Wolfspeed, ROHM, Infineon, and onsemi are leading IDMs. Most of these companies cover substrates, epitaxy, chip manufacturing, packaging, and modules, with stronger technology accumulation and customer bases in 8-inch mass production, automotive-grade certification, and high-end data center applications.

Implications for AI Data Centers

CSC estimates that under the AIDC boom and technology iteration, SiC power devices could generate an incremental demand on the order of tens of billions of RMB by 2030. The note argues that 800V HVDC and SST volume ramps will simultaneously drive demand for upstream core components. SiC is well suited to the high-voltage DC trend and is one of the core components of power supply hosts, with penetration rising in SST, HVDC, PSU, and solid-state circuit breakers. The upstream substrate and epitaxy segments are therefore expected to see notable incremental elasticity.

Risks and Future Outlook

The note lists several risks. On demand, changes in national infrastructure policy could lead to lower-than-expected power investment, grid investment, renewable installation growth, electricity consumption growth, grid tenders, and ultra-high-voltage construction progress. On supply, higher commodity prices for copper and steel, tight power electronics supply, and slower localization could weigh on the chain. Policy risks include weaker support for new power markets, slower electricity pricing reform, slower spot market progress, and lower peak-valley price spreads. International risks include a faster easing of the energy crisis, falling energy prices, and deeper trade barriers. Market risks include major changes in competitive structure, intensifying competition that lowers profitability across power equipment segments, and higher transport costs. Technology risks include slower cost reduction and difficulty in further improving reliability.

Despite these risks, the CSC note’s central message is that AIDC demand is creating a new cycle for power semiconductors, with SiC as the key material for the high-voltage DC transition. The combination of 800V architectures, SST, HVDC, and solid-state circuit breakers is expected to broaden SiC’s application base beyond electric vehicles and photovoltaic systems, while the supply chain prepares for higher-voltage, higher-frequency, and higher-reliability requirements.