On November 6, Guangdong Tianyu Semiconductor Co., Ltd. (02658.HK) issued an announcement stating its intention to acquire approximately 7% of the shares of Zhejiang Tony Electronic Co., Ltd. (603595.SH).
The announcement reveals that Tonytech' semiconductor business primarily focuses on the development and manufacturing of silicon carbide (SiC) substrates, covering 6-inch and 8-inch conductive substrates. This investment signifies that Tianyu Semiconductor is further extending its reach upstream in the industry chain, creating new opportunities for supply chain synergy, joint technology R&D, and market expansion between the two parties.
Currently, driven by rapid growth in markets such as AI data centers and NEVs (New Energy Vehicles), demand for SiC materials/devices is surging significantly, with many enterprises operating at full capacity and sales. At this critical juncture, Tianyu Semiconductor's deepened layout in the upstream supply chain embodies three strategic intentions, which are analyzed below.
01. Strengthening Supply Chain Resilience to Ensure Substrate Capacity
SiC substrates are critical foundational materials for epitaxial wafer production. Crystal quality, surface flatness, and defect levels of substrates directly impact the quality and yield of subsequent epitaxial growth. As SiC chip sizes continue to increase, stricter requirements are placed on the defect density of substrates and epitaxy, making the stability of substrate and epitaxial production particularly important.
The primary objective of this strategic investment is for Tianyu Semiconductor to strengthen its SiC supply chain construction. According to the announcement, Tianyu Semiconductor will combine its expertise in SiC epitaxial technology with Tonytech' capabilities in crystal growth and substrate processing to enhance coordination between substrate production and epitaxial growth.
Simultaneously, both parties will collaborate across material engineering, epitaxial process, and quality management teams. This cooperation supports traceability from crystal growth to epitaxy, improves cleanroom management and reliability testing, and enables the sharing of testing and analysis facilities, thereby increasing operational efficiency and reducing redundant testing and certification costs.
Tianyu Semiconductor stated that this collaboration is expected to support reliable supply of 6-inch and 8-inch conductive substrates, improve quality consistency and production yield, and reduce procurement costs and supply risks.
From a supply chain perspective, Tonytech and Tianyu Semiconductor occupy complementary positions upstream and downstream in the industry chain. For Tianyu Semiconductor, securing stable raw material supply and seamless process integration through strategic investment is a fundamental basis for improving production efficiency and controlling overall costs.
According to Tonytech' 2026 Semi-Annual Report, its SiC business mainly consists of conductive SiC substrates. It has successively delivered 6-inch and 8-inch conductive substrates to multiple SiC device customers, demonstrating stable mass production and delivery capabilities.
On the other hand, according to Tianyu Semiconductor's 2026 Interim Results Announcement, shipments of 6-inch SiC epitaxial wafers remained stable, while the proportion of 8-inch SiC epitaxial wafer shipments continued to increase. Combined sales revenue from 6-inch and 8-inch SiC epitaxial wafers accounted for over 80% of total revenue, forming the core of its earnings base.
Through this strategic investment, Tianyu Semiconductor's supply chain resilience will be further strengthened, helping to ensure stable supply of6-inch and 8-inch SiC substrates, enhancing upstream-downstream technical synergy, and providing downstream device customers with more stable and high-quality products.
Looking at industry trends, as the SiC industry scales up, corporate competition will gradually extend to supply chain efficiency and industrial synergy capabilities. By extending into the upstream substrate segment through this strategic stake, Tianyu Semiconductor is poised to build stronger support in supply chain efficiency and industrial synergy.
02. Jointly Tackling Large-Size Technology to Seize the First-Mover Advantage in 8-Inch Mass Production
Beyond ensuring stable capacity supply, Tianyu Semiconductor plans to jointly develop large-size SiC technology with Tonytech to consolidate its technological advantages and capture future market windows.
According to the announcement, the two parties will accelerate the R&D process: on one hand, continuously improving material quality through joint development of crystal growth, substrate processing, and epitaxy; on the other hand, accelerating the development of larger diameter (including 8-inch and above) SiC materials for high-voltage and automotive-grade applications, building technical reserves for wafer size upgrades.
This layout coincides with the SiC industry being in a critical phase of large-size transition. While 6-inch wafers remain mainstream for scaled production, the capacity and shipment proportion of 8-inch wafers are steadily increasing. The shift from 6-inch to 8-inch and larger sizes has become a clear trend and the main battleground for competition.
The core logic behind the SiC industry's race to "expand diameters" lies in cost reduction. Compared to 6-inch wafers, 8-inch/12-inch wafers offer larger effective areas. With mature processes and achieved yields, they can potentially increase the number of chips per wafer and lower unit manufacturing costs. However, upgrading to larger sizes imposes higher demands on crystal growth, substrate processing, and epitaxial processes.
In the SiC industry, where supply relationships are typically deeply integrated, substrate and epitaxial manufacturers must increase R&D investment and deepen collaborative efforts to realize the cost-reduction benefits of large sizes through continuous yield ramp-ups, effectively supporting downstream device capacity deployment.
According to incomplete statistics, nearly 30 companies and institutions globally have built or plan to build8-inch SiC wafer production lines, with publicly disclosed combined capacity exceeding several million wafers per year. Most of these lines are planned to start production in 2025, after which 8-inch SiC wafer capacity will see concentrated release post-2026.
As capacity utilization rates of 8-inch SiC wafer production lines gradually rise, demand for large-size substrates and epitaxy will continue to climb. It is foreseeable that whoever ensures stable supply of highly reliable large-size SiC substrates/epitaxy will gain the upper hand in the 8-inch market competition.
From a technical reserve perspective, the collaboration between Tianyu Semiconductor and Tonytech has a solid foundation for implementation: In epitaxy, Tianyu Semiconductor possesses a full series of 6/8/12-inch SiC epitaxial products, achieving full coverage of mainstream sizes; In substrates, Tonytech' total sales volume of 8-inch substrates continues to grow year-on-year. The company is advancing core technology breakthroughs and large-size capacity expansion plans, laying out 12-inch conductive and semi-insulating substrates, with some products already undergoing sample verification.
This means both parties hold the technical foundation for large-size SiC in the two key segments of substrate and epitaxy. In the future, they can fully leverage their respective strengths to form an integrated "substrate + epitaxy" synergy. Leveraging this advantage, both parties are well-positioned to take the lead and gain initiative in the wave of 8-inch mass production and even in the long-term competition for 12-inch.
03. Deepening Market Synergy to Expand Customer Coverage
Beyond technical synergy, Tianyu Semiconductor and Tonytech will also focus on strategic synergy on the market side. Tianyu Semiconductor stated in the announcement that tighter technical coordination can shorten the sampling and customer certification cycles for products serving electric vehicles, AI data centers, energy storage, and power grids, thereby expanding customer and product opportunities.
The two parties have complementary positions in downstream markets, particularly covering electric vehicles, AI data centers, photovoltaics, and energy storage. By collaborating around SiC power semiconductor materials and Tonytech' broader electronic material capabilities, Tianyu Semiconductor can support more comprehensive product offerings, strengthen customer relationships, and generate additional business opportunities in these applications.
From an industry perspective, the outlook for SiC power semiconductors is increasingly promising. As SiC power semiconductors accelerate adoption in NEVs, data centers, PV-storage-charging systems, and consumer electronics, demand for SiC substrates and epitaxy is expected to sustain growth.
Taking the largest application market for SiC power semiconductors—NEVs—as an example, estimates suggest that approximately one 6-inch SiC wafer is required for every seven two-wheel-drive SiC vehicle models. As NEV sales grow, SiC model penetration rates rise, and the scope of SiC applications in onboard scenarios expands, demand for SiC wafers will increase significantly.
According to statistics from Hangjiashuo Research, sales volumes of models using SiC main drives were 2.8 million, 3.87 million, and 6.05 million units in 2023, 2024, and 2025, respectively. From January to September 2026, global SiC model sales reached approximately 5.45 million units, already accounting for about 90% of last year's total sales, with full-year 2026 sales expected to significantly exceed 2025 levels.
Beyond the automotive sector, AI Data Centers (AIDC) are also becoming a new high-growth, high-value market for SiC devices. As leading vendors like NVIDIA, Microsoft, Meta, ByteDance, and Tencent accelerate the deployment of 800V DC data center power architectures, SiC devices will continue to be applied in UPS (Uninterruptible Power Supplies), server rack PSUs (Power Supply Units), SSTs (Solid-State Transformers), and high-voltage DC-DC converters.
Meanwhile, SiC devices are accelerating penetration into PV-storage-charging, consumer electronics, high-voltage power grids, rail transit, eVTOL, and electric ships. Leading end-users are continuously intensifying their layouts, expanding application scale. It is foreseeable that as these markets gradually ramp up, combined with sustained volume growth in NEVs and AI data centers, SiC demand is expected to enter a long-term growth channel.
According to estimates by Hangjiashuo Research, global SiC wafer demand will reach 7.33 million wafers/year by 2030, maintaining steady growth. This implies that demand for SiC substrates and epitaxy will grow synchronously in the coming years. Stable high-quality material supply capability will become a key variable in industry chain competition.
From the perspectives of industry development and corporate strategic layout, Tianyu Semiconductor extends into the upstream substrate segment through this strategic stake. Leveraging Tonytech' resources in electronic material capabilities and downstream customers, it aims to enhance supply chain resilience and industrial synergy efficiency, potentially expanding customer coverage and product opportunities in incremental markets such as NEVs, AI data centers, and PV-storage-charging systems.
04. Summary
In recent years, changes in relationships within the SiC industry have largely manifested as changes in supply chain relationships. Tianyu Semiconductor's strategic investment in Tonytech indicates that it requires not just capacity binding, but strategic binding.
This is also a microcosm of China's SiC industry entering a new stage. Over the past decade-plus, the focus was on scaling from zero to one; now, the core contradiction has shifted to "whether high-quality stable delivery is achievable," and competitive capability building has moved from single-segment technical advantages to chain synergy and stable delivery capabilities.
By driving industry chain integration, Tianyu Semiconductor is forging an advanced path of "technology accumulation—capital backing—industrial synergy." This serves as a pioneering exploration by a leading epitaxial manufacturer and reflects the maturation of the domestic SiC industry chain from extensive growth to integrated consolidation.