EPIWORLD (02726) Hong Kong IPO: The future star of the era of AI wave and reshaping of energy landscape.

In the wave of AI, reshaping the global energy landscape, upgrading and replacing the new energy vehicle electronic control system, and accelerating the construction of intelligent grids and microgrids in the 15th Five-Year Plan, silicon carbide is standing at the forefront of the industry as the "best answer material" for power semiconductors. As an important link in the silicon carbide industry chain, silicon carbide epitaxy has become a focal point of value with its customized properties and technological barriers. On March 30, 2026, "Global Silicon Carbide Epitaxy First Stock" EPIWORLD (02726) debuted on the Hong Kong Stock Exchange with a first-day increase of 36.06%, and a market value exceeding 49 billion yuan. Data shows that EPIWORLD, a global leader in silicon carbide epitaxial wafers, had a market share of 31.6% in 2024, with a gross profit margin leading the industry by over 12 percentage points, demonstrating comprehensive and strong competitive advantages in technology. It is one of the few companies that have maintained continuous profitability during a downturn cycle, with its pricing power beginning to be reflected. In 2024, the global sales of 8-inch equivalent traditional silicon epitaxial wafers was about 80 million pieces, while the annual sales of silicon carbide epitaxial wafers were only in the tens of thousands, marking the starting phase of the silicon carbide industry. Silicon carbide power semiconductor - the ultimate solution for electronic control under the AI wave and reshaping the energy landscape Under the dual drive of the AI wave and geopolitical factors reshaping the energy landscape, the strategic value of electricity has increased to an unprecedented level, with many industry leaders, including Elon Musk, believing that the "watt" will become the ultimate anchor of currency. Nearly every watt of electricity application in current and future human society depends on the transmission and regulation of power semiconductor chips. Silicon Carbide (SiC), as the "Hexagonal Warrior", with its excellent physical properties of high voltage resistance, high temperature resistance, high frequency, low loss, and high thermal conductivity, has become the best power semiconductor material for efficient control of electrical energy. 1. The "Smart Heart" of AI computing center: The global energy crisis has resulted in soaring electricity prices, and high-energy AI data centers are facing immense pressure from electricity costs, with energy efficiency (PUE) becoming a core competitive advantage in the AI computing industry. Silicon Carbide power semiconductors can significantly improve the electrical energy conversion efficiency of AI computing centers (reducing heat dissipation and losses) and enhance system reliability, making the use of silicon carbide power semiconductors as core components in 800V high-voltage direct current (HVDC) and solid-state transformer (SST) solutions a necessity. In the near future, the AI power industry chain will break through the trillion-dollar level, and silicon carbide power semiconductors, as indispensable and core components of this industry chain, will directly benefit from the rise of the AI wave. 2. The "Electrical Heart" of new generation transportation: Against the backdrop of escalating geopolitical conflict and increasing uncertainty in Gulf oil supply, global transportation vehicles are accelerating their transition to electrification. Silicon carbide power semiconductors are the best power semiconductor (power electronics) solution for new generation transportation vehicles such as new energy vehicles, high-speed trains, electric ships, and electric aircraft, capable of significantly improving the performance and charging experience of transportation vehicles. For example, the 1000V platform's silicon carbide flash charging technology achieves "5 minutes of charging, 400 kilometers of range", reducing energy consumption and increasing range. Silicon carbide semiconductors are the best solution for fast energy supplementation in new generation transportation vehicles. 3. The "Efficiency Engine" of new power systems: To ensure energy security and independence, major global economies are actively building new power systems dominated by renewable energy sources. China is planning to significantly increase its investment in grid construction, with an estimated investment of about 5 trillion yuan during the 15th Five-Year Plan period, far exceeding the 2.85 trillion yuan invested during the 14th Five-Year Plan period. This has led to a huge demand for core power electronic components that can improve the efficiency of power generation, transmission, and energy storage. With its high voltage resistance, high temperature resistance, energy efficiency, and recoverable avalanche breakdown characteristics, silicon carbide power semiconductors have become the best power semiconductor (power electronics) solution for new generation grid and energy storage schemes, such as smart grids, photovoltaics, wind power, and energy storage infrastructure. 4. The "Iron Armor Power Source" of the commercial space era: The commercial space era, represented by SpaceX, has already begun, with the extreme environment of outer space posing severe challenges for the power electronic components in terms of power density, heat dissipation, heat resistance, and radiation resistance. Silicon carbide material, with its excellent heat dissipation, heat resistance, and radiation resistance, can perfectly match the requirements of the space environment. Specifically, in terms of heat dissipation, silicon carbide's heat dissipation performance is over three times that of silicon, meaning silicon carbide chips can quickly dissipate heat. In terms of heat resistance, high-power silicon devices already fail completely at 125C, while silicon carbide power devices can operate normally in environments well above 200C. NASA has raised the working temperature of silicon carbide JFETs to over 800C. In terms of radiation resistance, silicon carbide is the "all-around champion" for gamma/X-ray total dose, proton neutron displacement damage, cosmic rays, and high-temperature radiation, making it the preferred choice for silicon carbide semiconductors in space radiation scenarios. Specialized Division of Labor - The Inevitable Trend of the Silicon Carbide Power Semiconductor Industry The trend towards specialized division of labor in the silicon carbide power semiconductor industry is an inevitable law of technological evolution and market development, and this trend is already clear. 1. The global silicon carbide power device market is expanding rapidly at a compound annual growth rate of 20%-35%. It is expected that the global market size will exceed $115 billion by 2035, with about 50% of it being the silicon carbide epitaxial wafer (substrate + epitaxy) market. With the explosive demand of multiple trillion-dollar industry chains, the trend of specialized division of labor in the silicon carbide power semiconductor industry is becoming more apparent. Leading companies in various segments are achieving economies of scale by focusing on their own advantageous segments, significantly improving production efficiency, and greatly reducing unit costs. Global silicon carbide chip IDMs are beginning to outsource more and more of their increasing demand for silicon carbide epitaxial wafers to professional epitaxy companies that can provide high-quality customized products steadily, in order to maintain the competitiveness of their chip products. This overall trend aligns with the consolidation trend in the silicon semiconductor industry in the past. As epitaxy largely determines the performance and stability of silicon carbide devices, with silicon carbide products entering more high-end application areas (such as smart grids and rail transportation), the value proportion of silicon carbide epitaxy in the entire industry chain will further increase. The historical experience of the silicon industry provides a clear reference. At the end of the 1980s, driven by the complexity and rising costs of technology under Moore's Law, the semiconductor industry shifted from a vertically integrated (IDM) model of design, manufacturing, and packaging testing to specialized division of design, manufacturing, and testing, with the establishment of TSMC as a key milestone. This transition gave rise to design giants like NVIDIA and AMD partnering with manufacturing giants like TSMC and Samsung, increasing industry research and development efficiency by 40% and shortening product iteration cycles to within 18 months, ultimately leading to the prosperity of the global semiconductor industry. In this process, most companies, including many silicon power device companies, turned to outsourcing epitaxial wafer production. While silicon semiconductor devices may not require epitaxy, all silicon carbide semiconductor devices cannot be manufactured without customized epitaxy production. In 2024, global sales of 8-inch equivalent silicon epitaxial wafers were about 80 million pieces, and the current demand for silicon carbide epitaxial wafers of several tens of thousands per year is only the early stage of development for the silicon carbide industry, indicating enormous growth potential. 2. The current silicon carbide industry chain has shown a significant trend towards specialized division of labor. Over a decade ago, due to the absence of independent third-party epitaxial wafer suppliers with strong competitiveness, the silicon carbide industry chain was dominated by the IDM plus material model, with the U.S.'s Wolfspeed as a representative company. With the development of the industry, specialized manufacturers focusing on their respective segments have emerged. In the substrate aspect, dozens of companies have basically formed a business model focusing on substrates, with Chinese substrate specialist companies holding a significantly larger market share in the 8-inch market than IDM companies supplying substrates for themselves. For epitaxy, market share of epitaxy specialist companies represented by China's EPIWORLD, Japan's Resonac, and the U.S.'s Coherent exceeds 55% of the overall epitaxy market. In terms of devices, the vast majority of Chinese device companies purchase epitaxial wafers externally. In order to enhance competitiveness, international IDM giants are beginning to transfer their epitaxy equipment at low prices, increasing the proportion of outsourced epitaxy production and reducing in-house production. It is evident that the rapidly deepening trend of specialization is quickly increasing the scale and efficiency of the industry chain, driving silicon carbide from "niche high-end" to "mass popularization". Customized Silicon Carbide Epitaxial Wafers - The Value Core of Silicon Carbide Power Semiconductors In the industry chain of silicon carbide power semiconductors, consisting of "substrate-epitaxy-chip", the epitaxial growth process plays a key role in connecting upstream and downstream, determining the core performance and reliability of the final device, and being one of the critical focal points of value. 1. The quality of epitaxy determines device performance: Silicon carbide power devices are made in the epitaxial layer, which serves as the functional layer of the device. The quality of the epitaxial layer directly determines the final performance and reliability of power devices. Unlike integrated circuit chips, the difficulty of power semiconductor chips lies primarily in the different chip processes, as power semiconductor chips need to directly withstand high voltage and large currents. Therefore, one of the core process challenges is the structural precision and quality control of the epitaxial layer material. 2. Customized epitaxy vs. standardized substrate: The substrate serves as the base of the chip and can be divided into different grades of standard products based on quality. With the low cost of single crystal growth furnaces for substrate growth at less than $100,000, many companies have entered the substrate race. On the other hand, the epitaxial layer, serving as the carrier of the chip's functionality, must be customized in production based on the chip designs of different customers. This requires high process capabilities and customer response capacities for manufacturers. Unlike the first generation of silicon semiconductor devices that can be used for device manufacturing without epitaxy, each silicon carbide substrate needs to be produced with a customized confidential epitaxial structure by the epitaxy company according to the customer's design in order to produce formatted silicon carbide power and optical devices. This kind of customized epitaxy product needs to meet no less than 15 specified parameters. Any failure to meet the custom requirements for any of these indicators will result in defective products. 3. Yield determines profitability: The key factor determining the profitability of silicon carbide epitaxy enterprises is product yield. Since epitaxial wafers are exclusively customized products for customers, the ability to deliver products that meet the increasingly strict specifications of customers is just one aspect. The more important aspect is how many of the produced products can meet the special customized requirements of customers. Companies with low yield competitiveness, the more products they sell, the more losses they may potentially incur. Leading Barriers of the Industry - Future Stars Under the AI Wave and Reshaping of the Energy Landscape Silicon carbide epitaxy, as a typical semiconductor industry, depends on technological advantages, customer base advantages, and market share advantages for its core enterprise value. From a comprehensive comparison, EPIWORLD already possesses a comprehensive and strong competitive advantage and is expected to become the future star under the AI wave and reshaping of the energy landscape. 1. Strong technical barriers and deep industry recognition. The founder of EPIWORLD is a globally renowned silicon carbide semiconductor scientist, with over 35 years of experience in silicon carbide semiconductor research and industrialization. He is the first IEEE academician of silicon carbide in the world. EPIWORLD is his successful second entrepreneurship. The company is the global leader in setting international industry standards, as the first and only company to break through 12-inch silicon carbide epitaxial wafer technology, leading the development of the global 12-inch industrial chain. The chip production output of a 12-inch wafer is 4.4 times that of a 6-inch wafer and 2.3 times that of an 8-inch wafer, significantly enhancing its competitiveness. 2. Global market leader. According to data from 2024, EPIWORLD ranks first globally with a market share of 31.6%, leading the second place, Japan's Resonac (19.4%), by over 12 percentage points, maintaining a solid leading position. 3. Top-notch customer quality. EPIWORLD covers 8 of the TOP 10 silicon carbide chip companies globally, with customer quality significantly superior to peers. 4. Outstanding profitability. Financial data for 2024 shows EPIWORLD's gross profit margin at 34.1%, while Japan's Resonac's gross profit margin is only 22.4%. Comparing the financial data of various companies, it can be seen that EPIWORLD's pricing power has begun to show, as even during the destocking cycle of declining operating rates in 2025, EPIWORLD maintained a gross profit margin of 25.6% and remained profitable while other industry peers faced significant pressure from losses. With strengthening technological barriers and improving economies of scale, it is expected that EPIWORLD's profitability advantage will be further strengthened. 5. Strong financial strength. According to publicly available data, EPIWORLD's RMB cash and cash equivalents have increased from 270 million in 2022 to 1.83 billion by the end of September 2025. Over the past nearly 5 years from 2021, EPIWORLD has generated approximately 1.4 billion in net cash flow from operating activities. Excluding equity expenses, the actual net profits of the enterprise in this period were 20 million, 172 million, 378 million, 321 million, and (forecasted) 178 million, totaling about 1.07 billion, equivalent to an annual profit growth of 137% starting from 2021 and achieving a total profit over 5 years. Net assets increased from 580 million to 2.98 billion, and total assets increased from 1.45 billion to 4.37 billion. On this basis, combined with the recently completed financing of 164 million Hong Kong dollars, EPIWORLD's financial reserves are continuously strengthening. In conclusion: Whether it is the AI computing center, energy storage system, high-voltage smart grid, new energy vehicles, or various applications such as electric transportation tools, the value chain of silicon carbide power semiconductors has become an essential component and energy source. Of greater significance is that the aforementioned markets are all in a rapid growth stage and beginning to release scale demand continuously. The addition of huge new markets is expected to develop at a speed far exceeding expectations, with explosive growth in demand for silicon carbide power semiconductors projected to occur in 2027. During the 15th Five-Year Plan, national grid investment is expected to reach 5 trillion yuan, with smart grid construction being a key focus of the plan, which will bring about a large demand for high-value and high-voltage silicon carbide epitaxial wafers. Benefiting from the explosive downstream demand and the deepening trend of industry specialization, the epitaxy race track in the silicon carbide industry chain is entering a golden age of rapid development. With leadership in technology and yield, the world's top market share, robust financial reserves, top-notch customer ecosystem, and maintaining profitability through market cycles, EPIWORLD anchors the development direction of the industry as the global leader in silicon carbide epitaxy, becoming the most certain future star in the power semiconductor industry under the dual drive of AI and energy.