The EV demand slowdown that began in the second half of 2024 has substantially rewritten the growth scenario for the SiC (Silicon Carbide) power device market. As OEMs decelerated their electrification pace, SiC module order deferrals piled up and short-term inventory corrections accumulated. At the same time, demand from industrial equipment, solar inverters, and data centers has expanded faster than anticipated, and structural diversification away from EV-centric demand is now well underway.
This shift does not mean SiC market growth has stalled. What matters is that the distribution of demand sources is changing. The SiC boom of 2022–2023 was driven primarily by a concentrated surge in EV demand, and the current inventory correction is a reaction to that. However, the industrial, solar, and data center segments each have demand cycles distinct from EVs, with lower volatility. From a procurement perspective, the risk profile now differs materially between suppliers with high EV concentration and those that have diversified.
The EV Slowdown and the SiC Inventory Correction
Following the surge in EV-directed SiC module demand in 2023, OEM and Tier 1 inventory levels rose through the second half of 2024. Major OEMs including Tesla, BMW, and Stellantis deferred portions of their electrification investment, while HEV (hybrid vehicle) mix strategies were reassessed.
SiC's cost advantage becomes apparent above 400V systems. Since BEV (battery EV) architectures are standardizing toward 800V, SiC adoption will expand over the long term — but the interim swing back toward HEVs is temporarily suppressing SiC adoption rates. This dynamic is expected to unwind to some extent by 2026–2027, and long-term EV-directed SiC demand recovery is broadly anticipated.
Long-Term EV Recovery Scenarios
The full recovery of EV-directed SiC demand depends on the completion of several structural transitions.
Proliferation of 800V architecture: The 800V high-voltage platform is the environment where SiC switching characteristics deliver their greatest benefit. Hyundai/Kia's E-GMP and the Mercedes EQXX are among the front-runners, and major OEMs are expected to complete their migration to 800V platforms between 2026 and 2028.
Lowering the adoption threshold through cost reduction: When SiC MOSFET costs fall to within 2x of Si IGBTs, the economic case for EV adoption improves substantially. Cost reductions driven by 8-inch wafer volume production between 2028 and 2030 are the precondition for accelerated adoption.
Expanding SiC adoption by Chinese EV makers: Chinese manufacturers including BYD, NIO, and Xpeng are adopting SiC for their high-performance EVs, and the Chinese market is becoming a pillar of SiC demand alongside Western OEMs. Chinese EV makers are deepening procurement relationships with domestic SiC manufacturers (BYD Semiconductor, TanKeBlue Semiconductor), a dynamic that is also reshaping the competitive landscape of the global SiC market.
Non-EV Demand Filling the Gap — Three Pillars in Detail
SiC adoption is expanding across three segments: solar power conditioning systems, industrial motor control, and data center UPS/PSU applications. None of these adoption cycles move as fast as EVs, but in terms of unit price stability and lot consistency, they represent more predictable demand characteristics. In addition, tightening energy efficiency regulations are driving equipment-upgrade demand in each segment, making them less sensitive to economic cycles than the EV market.
Industrial Motors and Inverters
Demand for higher efficiency in factory automation, HVAC, and pump applications is growing. SiC's switching loss reduction is particularly effective at the high switching frequencies involved, and adoption is expected to accelerate against a backdrop of rising energy costs. The tightening of energy efficiency regulations for motor drives under the IEC 61800 series is also a tailwind, and European and Japanese industrial equipment makers are increasingly adopting SiC in new designs. Stable annual unit replacement volumes keep demand volatility low.
Solar Power Conditioning Systems
Growth is tied to expanding global renewable energy investment. SiC MOSFET adoption is increasing in both single-phase and three-phase PCS, with the advantage of high-speed switching particularly effective in industrial and utility-scale systems above 1 MW. Improved conversion efficiency (more models now achieving above 99%) provides the economic rationale for SiC adoption, and unlike the EV market, demand is stable throughout the year. With global annual solar installations exceeding 400 GW, the PCS market is viewed as a certainty for long-term growth.
Data Center PSU and UPS
Efficiency requirements for AI server power supplies are becoming more stringent. UPS units using SiC can achieve conversion efficiency improvements of 2–3 percentage points compared to conventional silicon, making the ROI from power cost reduction straightforward to calculate. Data center operator investment is expected to continue through 2026–2028, and the low sensitivity to economic cycles provides a different risk profile from EVs. The decarbonization targets of major cloud providers — such as Microsoft's 2030 carbon-negative goal — structurally support demand for high-efficiency power devices.
Current State of the Inventory Correction and Demand Recovery Timing
The SiC device inventory correction that ran from the second half of 2024 into the first half of 2025 manifested as production adjustments and softening shipment prices at suppliers including Wolfspeed, STMicro, and Rohm. Supplier communications increasingly indicate that inventory levels are normalizing in the second half of 2025, and demand recovery from 2026 onward is expected to be led by industrial and solar demand.
The industry consensus is that a full recovery of EV-directed SiC demand will likely arrive around 2027–2028, when the 800V architecture transition is complete at major OEMs. In the interim, the three pillars of industrial, solar, and data center demand will continue to underpin SiC market growth.
High EV Dependency (above 60%)
Wolfspeed focused heavily on long-term EV contracts in 2023–2024 and has high sensitivity to EV market fluctuations. The temporary pause in capacity investment in 2025 is a manifestation of the risk from that high dependency. Diversification toward industrial and solar is underway but the portfolio remains EV-centric.
Well Diversified (EV below 40%)
Rohm and Fuji Electric have long-established industrial customer bases and have maintained relatively stable revenues through the EV slowdown. STMicro, despite exposure to Stellantis EV demand, is expanding into industrial and solar, and portfolio diversification is progressing.
Data Center Specialists (Emerging)
GaN Systems (under Infineon), Navitas, and EPC are focused on GaN/SiC for data center applications and have demand sources distinct from EVs. Stable growth is expected, underpinned by continued AI investment.
Evaluating Supplier Demand Portfolios
When evaluating SiC device suppliers, judging long-term potential by EV revenue share alone is insufficient. Suppliers where EV accounts for more than 60% of total revenue carry inventory correction risk, but if they have multiple channels into industrial, solar, and data center markets, demand smoothing can be expected.
Practical evaluation axes include tracking "revenue mix by end market" and "customer portfolio diversification" from financial reports. Where segment-level revenue is disclosed, tracking the EV mix change alongside industrial and renewable energy mix changes enables assessment of the inventory correction's impact and the recovery scenario. Confirming order status by end market during regular supplier dialogues is also a useful early indicator of supply stability.