What is Driving Silicon Carbide Prices in 2025?

Introduction

Silicon carbide (SiC), a crucial material for many high-tech industries, has seen significant price increases in recent months. As a key component in electric vehicles (EVs), photovoltaics, and industrial applications, silicon carbide is becoming more important across a range of industries. In this blog post, we explore the current trends driving silicon carbide prices and what to expect in 2025 as the market evolves.

Key Drivers Behind Silicon Carbide Price Increases

Several factors are currently pushing silicon carbide prices upward, including:

• Strong Demand from Electric Vehicles and Photovoltaics: Silicon carbide is essential for the high-performance power devices in electric vehicles (such as MOSFETs and diodes), which help increase energy efficiency and driving range. Despite a temporary slowdown in global electric vehicle sales, long-term growth and technological advancements (such as the rise of 800V high-voltage platforms) are expected to drive demand for silicon carbide. Additionally, the need for efficient inverters in the growing photovoltaic and energy storage sectors is also fueling demand.
• Supply Chain Challenges and Production Bottlenecks: While domestic production of silicon carbide substrates has increased, especially in China, the production of high-end 8-inch wafers remains limited due to technical challenges. This supply-demand imbalance has led to higher prices for advanced silicon carbide products.
• Rising Raw Material Costs: The price of raw materials, including high-purity silicon powder and silicon nitride, has increased, adding pressure on silicon carbide production costs. This cost increase has been passed down the supply chain, contributing to higher prices for silicon carbide products.
• Government Policies and Environmental Regulations: The Chinese government’s “dual carbon” policy, which promotes clean energy and the electric vehicle industry, has also driven investments in silicon carbide technology. The tightening of environmental regulations in manufacturing processes further contributes to cost increases.

Current Market Trends in Silicon Carbide

As of February 2025, the silicon carbide market has experienced a 100-200 yuan per ton increase in prices across various grades, including first-grade blocks, second-grade blocks, and lower-grade 70# silicon carbide. The rising costs of raw materials, particularly high-sulfur petroleum coke, have significantly impacted production costs, prompting many suppliers to raise their prices. While price increases have been somewhat accepted by downstream buyers, there has been a period of adjustment as companies navigate the new pricing landscape.

The growth of the electric vehicle market continues to be a key factor driving demand for silicon carbide. The expanding adoption of SiC-based power electronics in vehicles and renewable energy applications is expected to continue throughout 2025, maintaining upward pressure on prices. However, due to the high production costs, the price of high-end silicon carbide products may remain strong, while the prices of lower-grade products may experience more volatility.

Challenges Facing the Silicon Carbide Market

While the silicon carbide market is experiencing growth, there are several challenges that businesses should be aware of:

• Technology Barriers: Despite significant progress in production technology, challenges remain in achieving consistent high yields in 8-inch wafers. These challenges limit the supply of high-end silicon carbide products, which in turn supports higher prices for these grades.
• Geopolitical and Trade Risks: The global supply chain for silicon carbide is vulnerable to trade restrictions, especially from Western countries like the U.S. and Europe. These trade risks may lead to regional price fluctuations and further impact global availability.
• Substitution Risks: As silicon carbide is often more expensive than silicon-based alternatives, there is potential for substitution in certain applications. For example, some companies, like Tesla, have expressed interest in reducing their reliance on silicon carbide in favor of alternative technologies. However, silicon carbide’s superior performance in high-temperature and high-frequency applications makes it difficult to replace entirely.

Future Outlook for Silicon Carbide Prices

Looking ahead to 2025 and beyond, silicon carbide prices are expected to remain relatively high, driven by strong demand from the electric vehicle and renewable energy sectors. However, the market will likely see increased competition as new production capacity comes online and manufacturing processes improve. The price of high-end silicon carbide products, particularly those used in electric vehicles and renewable energy systems, is expected to remain robust due to ongoing technological barriers and supply constraints.

Over time, cost reduction through technological advancements, such as improvements in 8-inch wafer production, and economies of scale in manufacturing are expected to help lower prices for some segments of the market. However, high-quality silicon carbide products will continue to be priced at a premium due to the technical challenges involved in their production.

FAQs

1. Why are silicon carbide prices increasing in 2025?

The main drivers of silicon carbide price increases are strong demand from electric vehicles and photovoltaic systems, rising raw material costs, supply chain challenges, and government policies supporting clean energy.

2. How much have silicon carbide prices risen recently?

Silicon carbide prices have increased by 100-200 yuan per ton, driven by higher raw material costs and increased demand, particularly from the electric vehicle sector.

3. What sectors are driving silicon carbide demand?

Key sectors driving demand for silicon carbide include electric vehicles, photovoltaics, energy storage, and industrial applications, all of which require silicon carbide’s high efficiency and durability.

4. Will silicon carbide prices remain high in the future?

Yes, silicon carbide prices are expected to remain high in the near future due to sustained demand, supply chain issues, and ongoing technological challenges in production. However, improvements in manufacturing processes may eventually lead to lower prices for some grades.

5. What are the challenges facing the silicon carbide market?

The silicon carbide market faces challenges such as high production costs, technological barriers in wafer production, geopolitical trade risks, and potential substitution by silicon-based alternatives in some applications.