EPIWORLD (02726) released its interim results for 2026 on August 28, reporting revenue of RMB 578 million, a 92% year-on-year increase, with gross profit climbing 193.5% to RMB 161 million and adjusted net profit reaching RMB 139 million, up 43.4%. In a silicon carbide sector still navigating deep cyclical adjustments where most peers remain in loss-making territory, the global epitaxial wafer leader has bucked the trend by capitalizing on multiple major customers entering NVIDIA's supply chain, delivering standout growth ahead of the broader industry recovery.

Revenue, profit, and margins all surge in first-half results

The company's top-line growth remained robust, with revenue expanding to RMB 578 million from RMB 301 million in the prior corresponding period. Gross profit surged 193.5% year-on-year, significantly outpacing revenue growth, driven by the AI data center boom, an improving product mix, and economies of scale. Gross margin jumped 9.6 percentage points from 18.2% to 27.8%, a relative improvement of 52.8%, underscoring a substantial leap in profitability.

Adjusted net profit climbed 43.4% to RMB 139 million. Against a backdrop of widespread industry losses, the company's superior earnings performance highlights its widening technological and market advantages. Financial strength also improved markedly, with cash and cash equivalents (including fixed deposits) reaching RMB 3.22 billion as of June 30, 2026, up 76.3% from year-end 2025. Total assets and net assets grew 39.4% and 50.8%, respectively, to RMB 6.31 billion and RMB 4.54 billion, providing ample liquidity for capacity expansion and R&D investment.

Positioned squarely in the AI data center strategic赛道, the company is the only Chinese silicon carbide epitaxial supplier with large-scale presence in international supply chains. Four of the world's top five silicon carbide power device manufacturers are its customers, and all four are part of NVIDIA's AI data center supply chain. As demand for high-efficiency, high-reliability power electronics explodes in AI data centers, the company is already capturing significant benefits from the rapid growth in power chip demand, lending strong momentum to its growth trajectory.

In another milestone, EPIWORLD achieved its first small-batch orders for 12-inch silicon carbide epitaxial wafers during the reporting period, reinforcing its global leadership. As the world's first and only company to release the next-generation 12-inch SiC epitaxial chip, the company's 12-inch wafers can carry 4.4 times more chips per wafer than 6-inch and 2.3 times more than 8-inch, cutting per-chip costs by over 40%. This generational leap from 8-inch to 12-inch technology positions the company at the forefront of global market development.

Epitaxy represents the "value pinnacle" of the supply chain with rising share

Beyond the impressive interim results, the epitaxial segment's pivotal role in the value chain underpins the sustainability of this growth. Unlike silicon carbide substrates, which are standardized single-crystal bases lacking customer-specific structures, the epitaxial layer is what truly determines device performance and creates core value. Critical attributes such as breakdown voltage, switching efficiency, and energy loss are all governed by the epitaxial layer, defining the ultimate performance ceiling of each device.

Value chain analysis of automotive-grade silicon carbide chips reveals that epitaxy has already surpassed substrates in value contribution, a trend that widens with increasing voltage levels—overturning the outdated notion that substrate value is twice that of epitaxy. In 1200V automotive devices (10-13μm epitaxial thickness), epitaxial value already exceeds substrate value; in 3300V solid-state transformer/grid applications (30μm+), epitaxial value triples substrate value; and in ultra-high-voltage applications around 10kV (approximately 100μm), epitaxial value surpasses substrate by more than tenfold.

Industry-wide trends toward higher voltage applications—including 800V/1000V EV platforms, 1700V+ solar systems, AI data center solid-state transformers, and 3300V+ rail and grid infrastructure—are continuously elevating epitaxy's share of total value. Every voltage upgrade translates directly into greater epitaxial value weight. Industry consensus now firmly holds that the global epitaxial wafer market is multiples of the substrate market in size, with this ratio set to grow further.

AI data center boom: precision positioning in surging silicon carbide demand

Global AI computing demand has driven single-rack power from kilowatts to megawatts, pushing traditional low-voltage AC power architectures toward their performance limits. This is driving AI data center power supply systems toward higher voltage, higher frequency, and higher density configurations. Silicon carbide, with its wide bandgap, high breakdown electric field, and superior thermal conductivity, is the core material for this upgrade, applied in mid-to-high voltage segments such as grid interfaces and solid-state transformers.

According to CICC estimates, from 2026 to 2030, as AI data center power architectures evolve, the silicon carbide power device value per megawatt of computing power will compound at 144%-379% annually. By 2030, each megawatt of AI data center capacity is projected to correspond to approximately $220,000 in silicon carbide device value, implying a total addressable market exceeding $6.8 billion for silicon carbide devices in AI data centers alone.

For EPIWORLD, this represents a historic opportunity. As China's only silicon carbide epitaxial supplier with large-scale international supply chain penetration, with four of the top five global power device manufacturers as clients—all NVIDIA supply chain participants—the company is fully embedded in the core AI computing expansion ecosystem. The company has already begun reaping tangible benefits from the surging power chip demand generated by AI data center buildouts.

EVs, energy storage, and smart grid: multiple engines driving growth

Beyond AI data centers, other downstream applications for silicon carbide continue to grow rapidly. New energy vehicles remain the sector's fundamental growth driver. With global electrification rates rising and 800V+ high-voltage platforms accelerating adoption, silicon carbide power semiconductors are expanding from premium to mainstream vehicle segments. Yole forecasts that by 2031, 800V architecture vehicles will exceed 50% penetration, with the automotive silicon carbide power device market reaching $6.8 billion and growing at over 20% CAGR from 2025 to 2031.

In energy storage, silicon carbide's low-loss, high-power-density characteristics enable system conversion efficiencies above 99% while reducing equipment size and thermal management costs. As global installed storage capacity expands rapidly, substitution of traditional silicon-based IGBTs is accelerating. Growing renewable energy integration requirements, coupled with residential, commercial, and utility-scale storage adoption, are opening substantial market opportunities.

China's "15th Five-Year Plan" period is expected to see grid fixed-asset investment exceed RMB 5 trillion, up over 80% from the "14th Five-Year Plan" period, with smart grid upgrades as a key focus. Silicon carbide's exceptional performance in solid-state transformers and flexible DC converter valves positions it to capture significant demand as grid modernization progresses.

As the lead developer of international silicon carbide standards and the global epitaxial industry leader, EPIWORLD is well-positioned to capture growth dividends regardless of which downstream application accelerates first.

Peer comparison: financial metrics lead across the board, alpha characteristics stand out

A horizontal comparison with other listed companies in the third-generation semiconductor space highlights the exceptional quality of this interim performance.

Summary: epitaxy is the highest-value segment; EPIWORLD's four moats and one catalyst create the strongest alpha

Epitaxy sits at the core of the silicon carbide value chain. As industry demand undergoes a trend reversal, the combination of customization barriers and high-voltage adoption trends makes epitaxy the most certain and highest-value segment in the entire supply chain during this cyclical upturn. As the world's largest epitaxial wafer manufacturer, EPIWORLD is positioned to be the standout alpha play in this beta-driven market rally, supported by four formidable moats and one significant catalyst.

The first moat is global market leadership with first-mover advantage in 8-inch technology. In 2024, the company held a 31.6% global market share in epitaxial wafer shipments, firmly cementing its leadership. In May 2023, it became China's first producer to break through 8-inch epitaxial technology and commence commercial shipments; by 2024, it was the world's only company achieving mass production sales of 8-inch epitaxial wafers. As of June 2026, the company had established 8-inch product partnerships with 35 global customers, with first-half 8-inch shipments substantially exceeding full-year 2025 levels while maintaining industry-leading yield rates. The "first to breakthrough → first to mass supply externally" design-win advantage clearly demonstrates the semiconductor industry's winner-take-all dynamics.

The second moat is the generational gap created by the world's first 12-inch technology launch. In December 2025, the company unveiled the world's first 12-inch silicon carbide epitaxial chip—the largest SiC epitaxial wafer available globally—capable of carrying 4.4 times the chips of 6-inch and 2.3 times that of 8-inch wafers, reducing per-chip costs by over 40%. Notably, while 24 companies worldwide can now produce 12-inch substrates, EPIWORLD is the only one to have officially announced and achieved orders for 12-inch epitaxial wafers. Thickness and doping concentration non-uniformity have been tightened to ≤2.8% and ≤2.1%, respectively. This significant generational advantage positions the company to establish first-mover benefits in 12-inch commercialization, capturing the industry's migration toward larger wafer formats.

The third moat is the flywheel effect of deep customer relationships and rapid capacity expansion. The company serves four of the top five global silicon carbide power device manufacturers and eight of the top ten, creating exceptional customer stickiness. On the capacity front, monthly production reached 60,000 wafers as of June 2026, with steady expansion ongoing. With cash reserves far exceeding peers, the company has substantial firepower to widen its capacity advantage further.

The fourth moat is unique competitiveness forged through high yields. Yield rates directly determine unit costs, which are the primary driver of gross margins. The company significantly leads the industry in yield metrics, directly converting to superior gross margins. In the first half of 2026, despite no price increases in the epitaxial market, gross margin expanded from 18.2% to 27.8% year-on-year—a 9.6 percentage point improvement, representing 52.8% relative growth.

The one catalyst: imminent inclusion in the Stock Connect program. On August 21, Hang Seng Index Company announced its quarterly index review results as of June 30, 2026, with EPIWORLD being added to the Hang Seng Composite Index. The change takes effect after market close on September 4 and becomes effective September 7, at which point Shanghai and Shenzhen exchanges will correspondingly adjust the eligible scope for Stock Connect trading. Upon inclusion, the company will gain direct access to mainland China's substantial technology growth capital pools. Given that silicon carbide is a closely watched sector on A-shares, the company's status as a rare asset combining "global epitaxial leader + 8-inch mass supply + 12-inch world premiere," fully plugged into booming AIDC applications, positions it to attract significant mainland capital and command premium valuation multiples.

With this strong interim report now public and Stock Connect inclusion imminent, valuation re-rating under the high-growth thesis appears set to accelerate. (Data sources: EPIWORLD 2026 interim results announcement, public company disclosures, CICC and Industrial Securities research reports. This article does not constitute investment advice. Markets carry risk; invest with caution.)