From Bhubaneswar To Beijing: Can India Carve Space In Silicon Carbide's Red Ocean?

On 12 August 2025, the Union Cabinet cleared four new projects under the India Semiconductor Mission. Among them was a landmark decision that could shape the country’s technological future: Chennai-based SiCSem’s plan to set up an integrated silicon carbide (SiC) fabrication facility in Info Valley, Bhubaneswar.

Union Minister Ashwini Vaishnaw underlined the strategic significance of the move, calling silicon carbide an “evolving frontier” in semiconductor technology. He also pointed out that IIT Bhubaneswar has already invested Rs 45 crore in a dedicated research unit for silicon carbide, which has been delivering promising results.

That raises an obvious question: Why is SiC making waves across the semiconductor world? And what could it mean for India?

Silicon Carbide: The Disruptor After Silicon

A compound of silicon and carbon, SiC is a third-generation semiconductor material that offers advantages such as higher energy efficiency while allowing for reduced size compared with traditional silicon-based chips.

Chips made from this extremely hard semiconductor material can operate at higher temperatures, higher voltages, and higher frequencies, making them ideal for applications that require high power and efficiency.

As a wide bandgap semiconductor material, it can withstand voltages at least 10 times that of conventional silicon-based semiconductors before breaking down, making it ideal for high-frequency devices.

Discovered back in 1891, SiC was long confined to industrial uses such as cutting tools, heating elements for industrial furnaces, and semiconducting substrates for light-emitting diodes. But advances in materials science have unlocked its potential as a material that is smaller, faster, cooler, and more efficient than anything silicon can offer.

Why Automakers Swear by SiC

The rise of electric vehicles (EVs) has been a turning point. Automakers increasingly use SiC chips in power electronics such as inverters, converters, and onboard chargers. This enables more efficient energy management and longer driving ranges.

One of the most important advantages of SiC technology lies in efficiency. Compared to conventional Si components, SiC chips can cut energy losses from heat by as much as 50 per cent. For EVs, this translates into reduced battery sizes and significantly longer driving ranges on a single charge.

SiC semiconductors also have better electrical conductivity. They switch faster, waste less energy as heat, and can operate at much higher temperatures. This makes bulky cooling systems unnecessary, replacing them with compact, lightweight alternatives that free up both energy and space. The result is a leaner vehicle architecture where every saved kilogram translates into more range and performance.

These characteristics give automakers fresh design freedom. Smaller, lighter components not only reduce overall vehicle weight but also open up space for cargo or sleeker designs. Manufacturers can now push the boundaries of aerodynamics without compromising efficiency or reliability, an advantage that directly feeds into consumer appeal.

It is no surprise that leaders like Tesla embraced SiC early, setting the benchmark for the industry. Today, rivals are racing to catch up, making silicon carbide one of the defining technologies in the future of sustainable mobility.

Beyond EVs: Military and Strategic Uses

The potential of SiC goes well beyond cars.

China’s J-20 stealth fighter reportedly tripled its radar detection range thanks to SiC-based phased-array radar systems developed by scientist Xu Xiangang at Shandong University. This allowed Chinese radars to swiftly detect enemies and gain the first-mover advantage, the university said on its social media page.

Xu’s breakthroughs in scaling SiC single crystal growth from around 5cm to 30cm in diameter (2 to 12 inches) and producing high-purity, semi-insulating SiC have since been transferred to noted SiC producers such as Shandong-based SICC and Guangzhou Summit Crystal Semiconductor.

Where India Fits In

The global race for silicon carbide chips is intensifying as the surge in electric vehicles and renewable energy accelerates demand for high-performance power semiconductors.

Today, the SiC device market is valued at around $2 billion, but it is on track to grow sixfold, reaching between $11 billion and $14 billion by 2030, according to a McKinsey report. That translates into an impressive 26 per cent compound annual growth rate (CAGR).

Crucially, nearly 70 per cent of this demand is expected to come from EV applications, where SiC’s ability to power inverters and enable efficient energy management has made it the material of choice.

Yet despite its promise, the market remains highly concentrated. Just two companies dominate the SiC wafer and device segment,together holding close to two-thirds of global market share. This concentration has created a supply bottleneck at a time when industries across mobility, energy, and electronics are scrambling to secure access.

Even as customers scramble for access, the market has shown signs of strain.

Renesas Electronics, the Japanese chipmaker once bullish on SiC, has pulled back, shelving mass production plans after demand slumped and losses piled up, including a ¥250 billion hit from its deal with Wolfspeed, a US SiC wafer supplier now teetering on bankruptcy.

The irony is that only a few years ago, demand looked insatiable. Tesla and other automakers embraced SiC technology, and between 2022 and 2023 chipmakers rushed to announce investments amid fears of a shortage. But EV sales in Europe and the United States did not expand as rapidly as expected.

Subsidies were phased out, vehicle prices rose, and the momentum slowed just as Chinese suppliers began flooding the market with aggressively priced wafers and devices.

Executives describe what has happened since as a classic “red ocean”, a market so competitive that it is marked more by bloodletting than opportunity. A telling sign of this shift is the collapse in wafer prices.

Wolfspeed, the global leader, sold a mainstream six-inch SiC substrate for $1,500. Today, Chinese suppliers such as Guangzhou Summit Crystal Semiconductor offer them for as little as $500, while TankeBlue, a key supplier to Infineon Technologies, sells them at around $800. These are only two among dozens of little-known Chinese firms now undercutting established players.

The result is a brutal price war. Wolfspeed, once the undisputed leader, has been steadily losing ground, while Chinese producers not only meet their domestic needs but have also built a complete self-reliant ecosystem of equipment and materials.

“It is a bloody price war for SiC now. China not only has more than enough SiC, but it also created a complete homegrown ecosystem for equipment and materials,” said an executive with a Taiwanese compound chip equipment maker. “They do not need the likes of Applied Materials to help them build compound semiconductors.”

Texas Instruments, one of the leading suppliers of semiconductors for automotive and industrial applications, offers an interesting point of comparison. Instead of competing head-on with Chinese players in silicon or silicon carbide, the US firm has taken a different path by focusing on gallium nitride (GaN) power devices.

By pairing these GaN products with its well-established portfolio of analogue chips, Texas Instruments positions itself in a niche that plays to its strengths while sidestepping the fiercest battles in SiC.

The result is a market that is not only competitive but deeply strategic, where industrial policy, overcapacity, and geopolitics collide.

It is in this context that India’s decision to back a full-fledged SiC fabrication plant in Bhubaneswar stands out. More than an industrial venture, it represents a bet on technology and geopolitics. If successful, it could give India a foothold in one of the most consequential segments of the semiconductor industry.

Yet challenges remain. Fabrication facilities are notoriously capital-intensive, global wafer supply chains are tightly controlled, and the demand cycle can swing sharply, as Renesas’ retreat has shown.