Wolfspeed cannot compete with China’s artificially low prices and is locked out of the Chinese market, while 
SICC (天岳先进) steadily gains global market share.
China’s aggressive backing of compound semiconductors is rapidly reshaping the industry; its aggressive price suppression forces global competitors into unsustainable margins, driving non-Chinese firms out of the market.
SICC benefited from China’s aggressive EV expansion and semiconductor localization policies. In 2020, SICC’s long-term investment in fab construction reached around 88% of its revenue — an extraordinary scale, especially considering the company lost $92.44 million that year, exceeding its total revenue.
Despite its poor financial performance, SICC maintained an aggressive investment strategy, supported by China’s control over its EV market and export channels. This policy-backed expansion ensured demand for its compound semiconductors. In 2023, SICC experienced explosive growth, and by 2024 Q3, its operating margin turned positive, with a post-tax net profit margin reaching 10%. This success secured even more resources for future expansion, reinforcing its state-driven investment model. In 2023, SICC's capital investment was nearly four times higher than in 2020.
Despite expected to receive $75 million from
the CHIPS Act, Wolfspeed cannot match the scale of China’s state-backed semiconductor strategy. China’s EV industry is tightly integrated with its domestic "red supply chain”, creating a powerful advantage. China’s SiC semiconductor dominance is driven by major EV makers like BYD. BYD generates massive chip demand and prioritizes domestic suppliers, securing a fully localized supply chain from SiC substrates to EV production. This model benefited SICC, which derived 62% of its 2023 revenue from China’s domestic market. At the same time, Chinese SiC manufacturers aggressively expanded production, using high-capacity output to drive down global prices, further undermining Wolfspeed’s competitiveness.
Chinese firms are using low prices to penetrate global markets, squeezing out Wolfspeed and other Western competitors. Wolfspeed relies on US and European orders, with 16% of its 2024 revenue from the US and 28% from Europe. However, European semiconductor firms like Infineon began sourcing SiC wafers from SICC and TanKeBlue (天科合达) in 2023 to reduce supply risks. SICC, backed by domestic orders, is expanding into Western markets, while Wolfspeed has no access to the Chinese market in return.
China’s industrial policies shield local suppliers, ensuring that once its SiC technology and capacity reach maturity, domestic EV makers will prioritize Chinese substrates, permanently locking out Western competitors from China’s market.
In 2021, the Chinese government outlined its 14th Five-Year Plan and 2035 Vision, which includes large-scale investments in third-generation semiconductors. China’s confidence in this sector comes from three key factors:
* No single company can sustain the domination of compound semiconductor technology or market share, unlike the silicon semiconductor industry, which is led by Taiwanese and US firms.
* China’s massive EV market, combined with government subsidies and protectionist policies, ensures strong domestic demand to support local compound semiconductor production.
* Compound semiconductors require only basic fabrication processes, which are not yet restricted by US export controls, allowing China room to accelerate development.
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