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primarysourced Photonics sector Coherent
COHR
~5 min read · 1,060 words ·updated 2026-04-29 · confidence 45%

SiC power-electronics market

The silicon-carbide (SiC) power-electronics market is Coherent’s primary non-photonics adjacency. Coherent (via legacy II-VI Incorporated, the original SiC substrate producer outside Cree/Wolfspeed) is one of the global tier-one SiC substrate suppliers, with capacity in 150 mm and ramping 200 mm wafer formats. The structural setup as of April 2026 is materially different from the standalone-Coherent setup pre-2023 because of the DENSO + Mitsubishi Electric $1B joint-venture investment that separated the SiC business into a partially-owned subsidiary in December 2023.

Market sizing

YearSiC substrate TAM ($B) ⚠SiC device TAM ($B) ⚠Combined ($B)Source
2024~$2~$3~$5Yole Développement / IDTechEx aggregator-house
2025~$2.3~$3.5~$5.8Yole estimate
2026~$2.5–3~$4–4.5~$5.5–7Yole / IDTechEx
2028~$3.5–4~$6–8~$10–12EV-led growth baseline

⚠ Aggregator-house estimates throughout. The substrate-vs-device split is meaningful for Coherent’s positioning: Coherent’s franchise is substrate-and-epitaxy, not finished SiC devices. Wolfspeed (Cree) competes across both substrate and devices; Coherent is purely in the upstream materials layer.

Demand drivers

ApplicationShare of SiC demandDirection
EV inverters (traction, OBC, DC-DC)~70%Strong growth; mass-market EV transition through 2030
Datacenter power (PSU, server power supplies)~10%Inflecting upward with AI-cluster power density
Industrial power (motor drive, solar inverter)~10%Stable growth
Rail traction, grid, aerospace~5%Niche, slow growth
RF (5G base station)~5%Mature

EV adoption is the dominant variable — automakers’ shift to 800V architectures (which require SiC, not silicon) is the principal demand pull. Chinese, European, and US EV makers are the primary buyers. The 2024–2025 EV-cycle slowdown in the US and Europe muted SiC demand growth in those regions; Chinese SiC demand has remained robust.

Coherent-specific position

The December 2023 transaction with DENSO and Mitsubishi Electric is the structural shift in Coherent’s SiC franchise:

  • DENSO and Mitsubishi Electric each invested $500M for a 12.5% non-controlling interest in Silicon Carbide LLC (Coherent’s SiC subsidiary). Coherent retains 75% ownership (Coherent press release Dec 4, 2023) ✓.
  • Long-term supply agreements with both DENSO and Mitsubishi Electric for 150 mm and 200 mm SiC substrates and epitaxial wafers.
  • All operating and capital expenses of the Business funded by the Business — meaning Coherent’s parent-level capex burden for SiC capacity is partly reduced.
  • Substrate-and-epitaxy focus — Coherent does not produce finished SiC MOSFETs/diodes; it sells substrates and epi wafers to device-makers (Wolfspeed, STMicro, Onsemi, Infineon, ROHM, Mitsubishi, DENSO).

This structure insulates Coherent’s parent balance sheet from SiC capex risk while preserving share of SiC-business value through the 75% ownership.

Wolfspeed comparison

Wolfspeed (formerly Cree’s power-electronics business) is the most-comparable peer:

MetricCoherent (Materials segment + SiC sub)Wolfspeed
FY2025 revenueMaterials segment: $954M (FY ended Jun 2025)~$760M FY ended Jun 2025
SiC product scopeSubstrate + epitaxy (no devices)Substrate + devices (full-stack)
Wafer-size capability150 mm production; 200 mm ramping200 mm fab in Mohawk Valley NY
Capital structureDENSO + Mitsubishi $1B JV; parent partly insulatedHigh debt; capacity over-build during 2022–2024
Stock-price trajectoryStable / outperformingWolfspeed went into Chapter 11 Q4 2024 (delisted; emerged restructured) ⚠
Operating marginMaterials segment profitableWolfspeed deep operating losses

Wolfspeed’s distress through 2024 is partly a share gift to Coherent — customers requalifying away from Wolfspeed often land at Coherent or STM. The DENSO + Mitsubishi structure also locks in two of Wolfspeed’s biggest historical customers (Mitsubishi was a long-standing Cree/Wolfspeed customer; DENSO is a tier-one Toyota supplier).

Chinese substrate-supply pressure

The structural risk to the Western SiC franchise is Chinese suppliers scaling 150 mm and 200 mm capacity at lower cost basis. The leading names:

Chinese SiC supplierCapacity statusWestern customer penetration
TankeBlue150 mm production; 200 mm ramping CY2026Limited; primarily domestic-China
SICC150 mm production scale; 200 mm in qualSome European-tier qualifications
SynlightSmaller scaleDomestic-China
ZG CrystalSmaller scaleDomestic-China

Chinese SiC suppliers are pricing aggressively in the domestic-China market (where Western suppliers face trade-restriction friction) and are increasingly qualifying with European EV-makers. The risk for Coherent is price compression on the merchant SiC substrate market — particularly on 150 mm, which is a maturing category.

The mitigant: Coherent’s 200 mm wafer-size lead (in qualification with major customers) preserves a generation-ahead premium against Chinese 150-mm-only competitors. The DENSO + Mitsubishi JV also locks in long-term supply commitments at floor pricing.

SiC scenarios for Coherent

ScenarioMaterials-segment FY2028 revenueDrivers
Bull — EV acceleration + 200 mm leadership$1.5–2.0BEV adoption inflects; Coherent 200 mm penetration rises
Base — measured EV growth + Chinese pricing pressure$1.0–1.3BSteady SiC volume; modest ASP pressure
Bear — Chinese substrate price war$0.7–0.9BASP compression dominates volume growth

What would change the SiC thesis

  1. EV adoption inflection (positive or negative) — EV-cycle shape is the dominant demand variable.
  2. Chinese 200 mm production scaling at low cost — would compress ASPs structurally.
  3. Wolfspeed restructured re-emergence — could be share-positive (capacity reduction) or share-negative (re-entry of competitor).
  4. Coherent strategic divestiture of remaining 75% in Silicon Carbide LLC — has been considered (analyst speculation; no announcement); a full-divestiture would crystallize value but lose the 75% upside.

Sources