Summary of Conference Call Notes Industry Overview - **Industry**: Silicon Carbide (SiC) Substrates - **Key Players**: SICC, Infineon, Bosch, On Semi, Meta, Google Core Insights and Arguments 1. **TAM Opportunities**: The Total Addressable Market (TAM) for SiC substrates is expected to grow due to advancements in AR glass and AI data centers, with a projected TAM of US$44 million in 2027, representing 4% of the SiC substrate market valued at US$1.1 billion in 2024 [3][5] 2. **AR Glass Growth**: Meta's upcoming launch of AR glass Hypernova and Google's Aura project are anticipated to drive demand for SiC substrates, although current high costs and low yields hinder widespread adoption [3][11] 3. **AI Data Centers**: SiC devices are projected to play a crucial role in power conversion for AI data centers, with an initial TAM addition of ~1% in 2027, potentially increasing to ~20% by 2030 as 800V adoption rises [3][16] 4. **China's Competitive Position**: Chinese SiC substrate vendors, particularly SICC, are better positioned than local device makers due to their role in the supply chain for AR glass and AI data centers [4][5] 5. **Financial Projections**: SICC's bull case price target has been raised by 23% to Rmb104.4, with expectations of revenue contributions from AR glass and AI data centers adding 3% and 1% respectively by 2027 [5][24] Additional Important Insights 1. **Cost and Yield Challenges**: The high cost of SiC substrates (approximately US$1,600 for an 8-inch substrate) and low yield rates are significant barriers to adoption in AR applications [9][20] 2. **Supply Chain Collaborations**: SICC is actively collaborating with supply chain partners to promote SiC substrate applications in AR glasses and EV displays, indicating a strategic approach to market penetration [10] 3. **Market Share Dynamics**: China's SiC substrate vendors held a 36% global market share in 2024, with SICC supplying wafers to major industry players [4] 4. **Revenue Growth Expectations**: SICC's revenue is projected to grow at a CAGR of over 25% from 2024 to 2027, with gross margins expected to improve to over 35% by 2027 [24][34] 5. **Valuation Methodology**: The valuation for SICC is based on a P/B multiple of 5.4x for the base case, reflecting the average since its listing in January 2022, with a bear case at Rmb49.7 and a bull case at Rmb104.4 [31][41] Financial Performance Highlights - **Quarterly Revenues**: Total revenues for SICC are projected to be Rmb1,768 million in 2024, with a slight decline expected in 2025 before recovering to Rmb2,442 million by 2027 [30][49] - **Gross Margin Trends**: Gross margins are expected to fluctuate, with a notable increase anticipated by 2027 [30][49] - **Operating Income**: Operating income is projected to improve significantly by 2027, reflecting operational efficiencies and market share gains [30][49] This summary encapsulates the key points from the conference call, focusing on the SiC substrate industry, SICC's market position, financial projections, and the challenges and opportunities ahead.