Goldman Sachs: SICC (688234) – SiC Application Expansion and Technology Enhancements to Drive Profitability; Buy
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Following a management visit in Shanghai, Goldman Sachs maintains a Buy rating on SICC (688234.SS), a leading silicon carbide substrate manufacturer, with a 12-month target price of 115 yuan, offering 28% upside from the current price of 89.86 yuan. Management emphasized SICC's technological leadership, noting its globally dominant position in semi-insulating SiC substrates and its pioneering delivery of 12-inch SiC substrates. Furthermore, the company's early development of liquid phase growth technology positions it well against competitors.
The applications for SiC are rapidly expanding beyond electric vehicles into AI data centers operating at 800V, AR glasses utilizing optical waveguide lenses, and advanced semiconductor packaging. Substrate prices declined by mid-double digits in 2025 and are expected to decrease further in 2026, which should drive broader market adoption while pressuring smaller, less profitable manufacturers to exit. SICC plans to offset pricing pressures through capacity enhancements, faster LPG technology, and a product mix upgrade toward 8-inch and 12-inch substrates, thereby supporting gross margin expansion. Goldman Sachs forecasts revenue of 1.60 billion, 2.88 billion, and 4.17 billion yuan for 2025 through 2027, respectively. The target price valuation is based on 30.9 times 2029 estimated earnings.