What is the real state of the SiC industry in 2026? And where will it head in 2027? These are probably the most urgently sought answers in the current market.
On October 7, Episil Technologies released its latest financial report, using keywords such as "price hikes," "V-shaped rebound," and "rapid recovery of capacity utilization rate" to provide three strong signals from the front lines of the industry.
Continuous Financial Improvement Operations Emerging from the Trough
First, let us take a brief look at Episil Technologies's performance and operational status in the first half of this year.
In the first half of 2026, Episil Technologies's consolidated revenue was approximately TWD 3.329 billion (about CNY 759 million), a 25% increase year-on-year from the same period in 2025. The operating loss decreased by 84.36% year-on-year to TWD 72 million (about CNY 15.113 million), indicating an improvement in operational conditions.
In particular, in the second quarter of 2026, Episil Technologies's consolidated revenue was approximately TWD 1.795 billion (about CNY 377 million), a 16.97% increase quarter-on-quarter and a 29.6% increase year-on-year; operating profit reached TWD 19 million, ending nine consecutive quarters of losses.
At the investors' conference, Episil's Chairman Xu Jianhua pointed out that the operational trough has passed, and the second half of the year is expected to be significantly better than the first half. Revenue is estimated to grow by about 3% to 5% compared to the first half, and the outlook for next year is equally optimistic.
Based on this, "Hangjia Shuo Sandaiban" estimates that Episil's consolidated revenue in 2026 is expected to reach TWD 6.824 billion (about CNY 1.432 billion). It is expected to emerge from the trough of 2024-2025, but there is still a distance to go before recovering to the peak period of 2021-2023.
Overview of Episil's Revenue Over the Past 11 Years Source: Hangjia Shuo Sandaiban
Cooling Demand from Mainland China Customers, Automotive and Compound Semiconductor Segments Under Synchronous Pressure
However, behind the overall improvement in revenue and reduction in losses, Episil's business in China, automotive, and compound semiconductor segments are still declining simultaneously.
According to Episil's financial report, in the first half of 2026, its revenue in the United States increased by 30% year-on-year, and revenue in the Taiwan region of China grew by 80%. However, revenue from mainland China decreased by 16% year-on-year—its share dropped from 25% last year to 17%, a decrease of approximately TWD 23 million.
In terms of product application scenarios, in the first half of 2026, the share of Episil's automotive business dropped from 22% in the same period last year to 12%, a decrease of approximately TWD 43 million. Meanwhile, the share of the industrial market decreased from 48% to 43%, but the shares of the consumer market and the AI market are increasing.
In addition, "Hangjia Shuo Sandaiban" reviewed Episil's financial reports over the years and found that from 2023 to 2026, its revenue from SiC and GaN businesses has been declining year by year.
In 2023, Episil's compound semiconductor revenue peaked at approximately TWD 1.753 billion (about CNY 368 million), but by 2025, it had fallen to TWD 884 million (about CNY 186 million), a decrease of about 50.4% compared to 2023.
In the first half of 2026, Episil's compound semiconductor revenue does not seem to have completed its recovery yet—the revenue in 1H 2026 was only TWD 286 million (about CNY 65 million), down about 67.7% from TWD 886 million (about CNY 220 million) in the same period in 2023.
Overview of Episil's Annual Compound Semiconductor Revenue Source: Hangjia Shuo Sandaiban
Although Episil's compound semiconductor revenue declined in the first half of the year, this financial report still reveals four positive development trends, which are detailed below.
Signal 1: SiC V-Shaped Rebound, Facing Shortages and Price Hikes
As mentioned earlier, Episil's revenue in the second half of this year is expected to grow by 3%-5% compared to the first half, with the SiC business being a major focus for its revenue turnaround.
According to reports from Taiwan media, Episil's Chairman Xu Jianhua explicitly stated at the conference that the inventory adjustment of its SiC customers is nearing its end, and a clear "V-shaped rebound" has been seen in the second half of the year with rapidly recovering demand, expressing optimism for the second half of the year and next year.
Episil's General Manager Liu Canwen stated that in the first half of this year, the company's SiC capacity utilization rate was less than 30%, remaining a relatively weak product line for the company. This was mainly affected by the sluggish demand in the automotive market over the past two years and inventory adjustments by customers since the fourth quarter of 2025.
However, in the second and third quarters, the SiC wafer start volume from Episil's customers has increased significantly, and demand is rapidly warming up. Liu Canwen revealed that in the second half of this year, Episil's SiC revenue will increase by 120% compared to the first half, with the capacity utilization rate reaching 60% in the third quarter and further increasing to 80% in the fourth quarter.
Even more noteworthy are two other pieces of information regarding SiC.
On the supply side, Episil believes that the 6-inch SiC market may face shortages next year.
On the pricing side, Episil explicitly pointed out that after the rapid decline in supply chain prices in the early stage, the average selling price of SiC has stabilized from its decline, with some products even seeing a slight rebound. Coupled with the upward pressure on raw material costs such as SiC epitaxy, they have begun to discuss price adjustments with customers, and some products are expected to reflect this successively starting from the first quarter of 2027.
Signal 2: 8-Inch SiC Imminent
Meanwhile, at this investors' conference, Episil also revealed the progress of 8-inch SiC.
To cope with the rising demand for 6-inch SiC, Episil stated that they are simultaneously accelerating their 8-inch SiC layout.
Currently, Episil's monthly capacity for 6-inch SiC is about 5,000 wafers, and the monthly capacity for 8-inch SiC is about 1,500 wafers. They are rapidly expanding the 8-inch capacity to 3,000 wafers per month through investment. At present, the equipment for Episil's 8-inch SiC production line is already in place.
In addition, Episil also revealed that the chip designs for their first batch of five 8-inch SiC customers are close to or have completed verification, and are expected to achieve tape-out by the end of this year. The yield of the first batch of pilot production wafers is better than expected, and small-batch mass production is expected to be achieved by the end of this year.
Signal 3: GaN Running at Full Capacity, AI Data Centers Becoming Core Driver
From the perspective of downstream application structure, a major business highlight for Episil in the first half of 2026 is that the share of AI-related business has reached 5%, and it is in a stage of rapid volume growth.
Liu Canwen pointed out that AI data centers and servers are currently the strongest growth momentum for Episil. Benefiting from the strong shipment momentum of AI servers, coupled with the drive of geopolitical factors, a large amount of AI-related demand is pouring into Episil. In the first half of this year, its AI-related revenue accounted for 5%, and it is estimated to reach 10% in the second half of the year, with the opportunity to further increase to 10% to 20% next year.
Based on this, "Hangjia Shuo Sandaiban" estimates that Episil's AI revenue in the first half of this year was approximately TWD 166.5 million (about CNY 34.95 million), and the full-year AI revenue for 2026 is expected to be TWD 515.91 million (about CNY 108 million).
According to Liu Canwen, the AI business has first driven a rapid increase in Episil's GaN demand. From the second half of this year to next year, its GaN production lines will run at full capacity. It is estimated that GaN revenue in the second half of this year will increase by 25% to 30% compared to the first half, growing by 50% for the full year, and is expected to grow by more than 20% next year.
Liu Canwen stated, "Customers' GaN demand for the next two years is doubling, and they also hope that Episil can expand production further."
Summary by Hangjia Shuo Sandaiban
Foundry and epitaxy manufacturers are located in the mid-to-upstream of the SiC/GaN industry chain. Their capacity utilization and order visibility are important references for observing the temperature of the third-generation semiconductor industry cycle.
From Episil's operational financial report, it can be seen that the SiC/GaN industry is accelerating its improvement. After the previous round of adjustments, inventory pressure has eased, and supply, demand, and prices are also improving. The operations of SiC/GaN enterprises are expected to gradually recover. Meanwhile, new downstream applications such as AI data centers are taking over from NEVs, and the demand for third-generation semiconductors no longer relies solely on a single market.
This article is published by [Hangjia Shuo Sandaiban], focusing on industry observations in the third-generation semiconductor (SiC and GaN) sector.