New Stock Outlook | Withstanding the Pressure of SiC Substrate Price Drop, Turning Losses into Profits Sicc Co., Ltd. (688234.SH) Prepares for Financing in Hong Kong "Elimination Match"?

C624008SiC Sicc Co., Ltd.68 Sicc Co., Ltd.8SiCSicc Co., Ltd.The price of SiC substrate supplier C has dropped by more than 30%, with the price of 6-inch wafers falling below $500 in the third quarter. It is expected that by the fourth quarter of 2024, the price of 6-inch SiC substrates will further drop to $450 or even $400, which is close to the production cost line of some Chinese manufacturers.What is more alarming is that the price of 6-inch wafers may not immediately stop falling. With more capacity coming online and the arrival of the 8-inch era, there may still be room for further price reductions in the future for 6-inch wafers. For example, based on publicly available information, the scale of 6-inch SiC substrate production capacity being built or planned by domestic manufacturers is still considerable. As for Sicc Co. Ltd., the good news is that the company's shipments of 8-inch wafers are already in a leading position in China. According to the prospectus, Tianyue already has the capacity for mass production of 8-inch SiC wafers in 2023. The company's factories can quickly switch from producing 6-inch products to 8-inch products, and 8-inch products are already being mass produced for international clients. Compared to 6-inch wafers, the research and production barriers for 8-inch SiC substrates are higher, resulting in a relatively less competitive landscape. Not only that, upgrading from 6-inch to 8-inch SiC substrates can increase chip production efficiency, even though the processing cost may increase. additionally, the increased thickness of the 8-inch wafers helps maintain geometric shapes during processing, reduce edge curvature, lower defect density, and improve yield, ultimately significantly reducing the comprehensive unit cost. According to the calculation of silicon carbide substrate manufacturer TecoHD, upgrading from 6-inch to 8-inch wafers is projected to reduce unit costs by 35%. In conclusion, whether it's the structure of supply and demand or cost considerations, shifting from 6-inch to 8-inch SiC wafers is more beneficial than harmful for manufacturers. In fact, transitioning from 6-inch to 8-inch wafers is already a clear industry trend. According to Jibang Consulting data, the market share of 8-inch products was less than 2% last year, and it is expected to grow to around 15% by 2026. It is easy to see that with the increasing price fluctuations of 6-inch SiC wafers and the approaching mass production timeline of 8-inch SiC wafers, a new round of reshuffle in the industry is imminent. At this critical juncture, Sicc Co., Ltd. is making a move towards the Hong Kong Stock Exchange, which has significant implications. The recently disclosed 2024 performance report may be seen as a "booster shot" for Sicc Co., Ltd. in its dual listing in Shanghai and Hong Kong. Looking ahead, with optimistic expectations, the company also has the opportunity to achieve global leadership. However, this is contingent on Sicc Co., Ltd. being able to maintain or even expand its competitive advantage in the new industry trends, which requires not only the ability to self-generate revenue but also continuous high-intensity research and development investments to strengthen technology and new product reserves.