Core Viewpoint - The silicon carbide (SiC) market is expected to stabilize in pricing as it enters 2025, following a year of capacity expansion and price pressure, while new opportunities in the AI sector are emerging [1][11]. Market Overview - The price of SiC substrates continues to decline, but the trend is showing signs of improvement compared to 2024. The main application market remains in electric vehicles, with new applications in AI data centers and AR glasses poised for growth [1][11]. - The leading domestic SiC substrate company, Tianyue Advanced, reported a revenue of 318 million yuan for Q3, a year-on-year decrease of 13.76%, with a cumulative revenue decline of 13.21% for the first three quarters. The net profit for Q3 was a loss of 9.76 million yuan, down 123.72% year-on-year, attributed to strategic price reductions to gain market share amid fierce competition [1][2]. Price Dynamics - The price of 6-inch SiC substrates is projected to have decreased by approximately 30% in 2024, with some manufacturers quoting prices below 3,000 yuan per piece, nearing the cost line for many producers. The overall price decline is slowing down, with limited room for further decreases [3][11]. - The market sentiment is improving, with a gradual recovery in downstream customer purchasing intentions as industry demand rebounds. The competition is expected to become more rational, leading to a more stable pricing structure [4][11]. Application Trends - The shift towards 8-inch substrates is gaining momentum, although current production capacity remains limited compared to 6-inch substrates. The transition to 8-inch is expected to take time due to the need for product reintroduction [5][11]. - SiC's core material advantages, particularly in high-voltage applications, are expected to maintain a higher value and more stable pricing compared to lower voltage markets where product homogenization and price competition are prevalent [5][6]. AI Sector Opportunities - The AI industry is increasingly expressing interest in SiC applications, with major companies like NVIDIA planning to transition to 800V HVDC data center power infrastructure by 2027, which will drive demand for SiC devices [7][10]. - The data center market, while currently smaller than the electric vehicle market, is anticipated to grow rapidly due to the adoption of high-power, efficient architectures, positioning SiC as a key component in future developments [11].

Core Viewpoint - Tianyue Advanced has successfully listed on the Hong Kong Stock Exchange, becoming the first company in China to achieve an "A+H" dual-platform layout in the silicon carbide substrate industry, attracting significant market interest and investment [1][8]. Group 1: Global Leadership Potential - The company has established a strong market presence, with a projected global silicon carbide substrate market size of 8.8 billion RMB in 2024, expected to grow to 58.5 billion RMB by 2030, representing a compound annual growth rate (CAGR) of 37.1% from 2024 to 2030 [2]. - Tianyue Advanced is projected to capture 16.7% of global substrate revenue in 2024, ranking among the top three, and has a 22.8% market share in the conductive segment, making it the second globally [2]. - Revenue is expected to grow from 417 million RMB in 2022 to 1.768 billion RMB in 2024, with a turnaround to profitability and a gross margin of 24.6%, resulting in a net profit of 179 million RMB [2]. Group 2: Technological Advancements - The company has achieved significant technological breakthroughs, completing the commercialization of 2-8 inch substrates and planning to launch the first 12-inch samples in 2024, indicating advancements in size scaling and defect control [3]. - Tianyue Advanced holds over 500 patents, transitioning from "point innovations" to a "systematic moat" in technology, validated by international authorities and clients [3]. Group 3: Manufacturing Scale - The company has established a dual-base production strategy in Shandong and Shanghai, with a total production capacity of approximately 420,000 wafers per year and a utilization rate of 97.6% [3]. - The operational efficiency of the Shanghai factory, which began mass production in May 2023, has led to reduced fixed costs and improved yield rates, enhancing gross margins and cash flow [3]. Group 4: High-Quality Customer Base - Tianyue Advanced has formed partnerships with over half of the top ten power semiconductor manufacturers globally, including Infineon, Bosch, and ON Semiconductor, indicating a strong demand-side position [4]. - The company's overseas revenue is projected to grow by 104% year-on-year in 2024, accounting for nearly half of total revenue, reflecting a robust global sales and quality system [4]. Group 5: AI Glasses and NVIDIA Ecosystem - The company is positioned at the intersection of the rapidly growing AI glasses market, with global shipments expected to reach approximately 870,000 units in Q2 2025, driven by demand from brands like Meta and Xiaomi [5][6]. - Tianyue Advanced's silicon carbide substrates are integral to the optical waveguide technology used in AI glasses, marking it as a key player in this emerging market [6]. - The company is also embedded in NVIDIA's ecosystem, benefiting from the demand expansion in AI accelerators and data centers, which could enhance its valuation significantly [6][7]. Group 6: Market Position and Future Outlook - The listing on the Hong Kong Stock Exchange provides Tianyue Advanced with efficient financing channels for capacity expansion, with an issue price of 42.8 HKD creating a safety margin of over 40% compared to A-shares [8]. - The company has begun supplying major clients in Japan and has received industry recognition, indicating a shift from being a "Chinese leader" to an "international brand" [8]. - The current valuation mismatch between deep discounts in H-shares and high growth in performance suggests potential for valuation recovery as AI supply chain news unfolds [9].