Anchoring the high-end market: building a moat with automotive grade and large-sized substrate

Faced with the smoke of price wars in the low-end market, Tianyue Advanced did not blindly get involved in the vortex of price wars. Instead, it firmly chose a differentiated competition route, focusing on high barrier niche areas and building its own competitive moat with high-end automotive products and large-sized substrates as breakthroughs. Company Secretary Zhong Wenqing has clearly pointed out on multiple occasions that the current price competition in the silicon carbide substrate market is mainly concentrated in the field of industrial grade substrates with relatively low technical barriers. In this niche market, due to the low entry threshold, many companies have flooded in, resulting in extremely fierce market competition and price wars. However, high-end products with automotive specifications are mainly concentrated in the field of new energy vehicles that require high performance and reliability, with high technical barriers and limited effective production capacity. The market is still in a state of supply shortage. In new energy vehicles, silicon carbide power devices play a key role in improving vehicle performance and efficiency, and reducing battery costs. This requires automotive grade silicon carbide substrates to have excellent quality and stability. Only a few enterprises with deep technical accumulation and strict quality control systems can meet this requirement, and Tianyue Advanced is one of them. With years of technical research and production experience in the field of silicon carbide substrates, the company has achieved large-scale mass supply of its automotive grade high-quality conductive substrate products to international large factory customers, occupying an important position in the automotive grade market, and the price system is relatively stable.

In the field of large-sized substrates, Tianyue Advanced has also demonstrated strong technical strength and market competitiveness. With the acceleration of the global silicon carbide market's transition from 6 inches to 8 inches and 12 inches, large-sized silicon carbide substrates have become a new trend in industry development due to their significant advantages in cost reduction and efficiency improvement. 8-inch and 12 inch large-sized substrates can increase the number of chips produced per unit area during the production process, reduce the production cost per unit chip, and also meet the demand for high-performance devices in application fields. However, the production technology of large-sized substrates is extremely difficult, requiring a series of key technical challenges such as crystal growth and defect control to be overcome. Currently, there are only a few companies worldwide that can achieve mass production of 8-inch and 12 inch large-sized substrates. Tianyue Advanced has advanced its layout in this field, continuously investing in research and development resources, and has achieved significant results so far. The company not only has significant advantages in 8-inch substrate technology and product quality, but has also achieved mass sales of 8-inch substrates, leading the industry in terms of shipment volume and product yield rate, winning high recognition from customers; We are a global leader in 12 inch substrate technology, pioneering the launch of 12 inch silicon carbide substrates and achieving mass production, becoming the first enterprise in the world to achieve this breakthrough. These technological and market advantages have enabled Tianyue Advanced to stand out in the large-size substrate market and build a solid differentiated competitive advantage.

Exploring the incremental track: AI+AR opens up the second growth curve

Against the backdrop of slowing growth and intensifying competition in the traditional new energy vehicle market, Tianyue Advanced actively seeks new business growth points and has turned its attention to emerging application areas. By laying out AI data centers and AR glasses optical substrates, it has opened up a second growth curve for the company. With the rapid development of artificial intelligence technology, the demand for high-power and low loss power devices in AI data centers is increasing day by day. Silicon carbide devices, with their unique low loss advantage, have shown great potential for application in the PFC (power factor correction) stage of server power supply in AI data centers. Compared to traditional silicon-based devices, silicon carbide devices can effectively reduce the energy consumption of power systems, improve energy utilization efficiency, and meet the stringent requirements of AI data centers for high efficiency. Tianyue Advanced has keenly captured this market opportunity and actively invested in research and development as well as market expansion. At present, the company's silicon carbide substrate products have been recognized by leading companies such as NVIDIA and have been successfully applied in their data center power systems. With the launch of NVIDIA's 800V HVDC data center power architecture, the demand for silicon carbide substrates is expected to further grow rapidly. As a leading enterprise in the industry, Tianyue Advanced is expected to achieve rapid product volume in this field, bringing new revenue and profit growth points to the company. In the field of consumer electronics, AR glasses, as an important development direction for the next generation of smart wearable devices, are gradually entering people's vision. Tianyue Advanced actively expands into the AR glasses optical substrate market by leveraging its advantages in silicon carbide substrate technology. Silicon carbide material has the characteristic of high refractive index, which enables single-layer lenses to achieve a large field of view angle of over 80 degrees. While breaking through the visual boundary, it can effectively compress the thickness of the lens, providing users with lighter and thinner sizes and larger and clearer visual effects. Combined with surface relief grating (SRG) waveguide technology, silicon carbide can also eliminate rainbow patterns and dispersion phenomena, laying a physical foundation for immersive experiences. At present, Tianyue Advanced's related products are cooperating with domestic and foreign head technology companies for sample verification. The company has successfully entered the AR glasses supply chain and established cooperative relationships with multiple global synchronous optical field manufacturers. With the gradual maturity of the AR glasses market and the increasing demand, Tianyue Advanced is expected to achieve commercial breakthroughs in this field and cultivate it as an important growth point for the company in the future.

Cost reduction and efficiency improvement: Technology iteration+economies of scale to hedge price pressure

Faced with the severe challenge of the continuous decline in silicon carbide substrate prices, Tianyue Advanced is well aware that relying solely on price competition is not a long-term solution. Only by reducing costs through technological iteration and economies of scale can we win the initiative in market competition. The company emphasizes that technological progress and economies of scale are the core levers to cope with price declines. By continuously improving crystal growth yield, optimizing production processes, reducing unit costs, and promoting the release of 8-inch production capacity, the company utilizes the cost dilution advantage of large-sized substrates to achieve "cost reduction through technology" instead of "price for market", laying the foundation for long-term profitability. In terms of technological iteration, Tianyue Advanced continues to increase research and development investment, committed to improving crystal growth yield. Crystal growth is a crucial step in the production of silicon carbide substrates, and the yield directly affects the cost and quality of the product. The company continuously improves the stability and quality of crystal growth by optimizing the design of crystal growth equipment, improving thermal field design, and developing new powder synthesis technologies, thereby increasing yield. In terms of production process optimization, the company carries out refined management of various links in substrate processing, introduces advanced automation equipment and intelligent control systems, improves production efficiency, reduces errors and losses caused by manual intervention, and further reduces production costs. These technological iteration measures not only improve product quality, but also effectively control unit costs and enhance product competitiveness in the market. Scale effect is also an important strategy for Tianyue Advanced to reduce costs and increase efficiency. The company actively promotes the release of 8-inch production capacity, and with the gradual increase in production capacity at the Shanghai Lingang factory, the output of 8-inch silicon carbide substrates continues to increase. Large sized substrates have significant cost dilution advantages in the production process. With the increase of output, fixed costs such as equipment depreciation, labor costs, and raw material procurement costs per unit substrate gradually decrease, thus achieving effective cost control. The company also establishes long-term stable cooperative relationships with suppliers, optimizes supply chain management, further reduces raw material procurement costs, and improves overall operational efficiency. Through the synergistic effect of technological iteration and economies of scale, Tianyue Advanced has gradually overcome its dependence on price competition and established a firm foothold in the market with technological and cost advantages, laying a solid foundation for long-term profitability and sustainable development.