How Tariffs Reshaped the Global Silicon Carbide Market

The Trump administration's aggressive trade policy, particularly the imposition of tariffs on Chinese imports, had a ripple effect across many advanced materials industries, including silicon carbide (SiC). As a critical material used in power electronics, electric vehicles (EVs), renewable energy systems, and semiconductors, SiC's supply chain has traditionally been deeply globalized, with significant manufacturing and raw material processing occurring in China. The tariffs, particularly those under Section 301, imposed as much as 25% duties on a wide range of Chinese industrial products, including materials and components essential to SiC production and end-use applications.

These tariffs introduced notable cost pressures for U.S.-based and Western companies sourcing SiC wafers, substrates, and finished semiconductors from Chinese suppliers. In the short term, this led to increased input costs for power electronics and semiconductor firms relying on SiC for high-efficiency applications, such as inverters and high-voltage devices. Moreover, manufacturers faced longer lead times and reduced pricing flexibility, impacting competitiveness and slowing down SiC adoption in EVs and industrial automation markets. As a result, several companies began accelerating efforts to localize supply chains, establish alternative sourcing relationships, and ramp up domestic SiC manufacturing - especially in the United States and Europe.

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Long-term, the tariffs catalyzed strategic investment across the value chain. Leading players such as Wolfspeed (formerly Cree), II-VI (now Coherent), and STMicroelectronics increased capital expenditures to develop U.S.-based SiC foundries and wafer facilities, aiming to reduce dependence on Chinese imports. Government support through tax incentives and R&D grants further supported this shift, helping to establish a more resilient domestic SiC ecosystem. In parallel, non-Chinese Asian players like Japan and South Korea began to strengthen their positions in high-purity SiC crystal growth and wafer processing, capitalizing on global demand realignment.

While the post-Trump tariff environment created short-term frictions and pricing volatility in the silicon carbide market, it also served as a turning point for supply chain diversification and domestic production. The forced strategic realignment has positioned the U.S. and its allies to secure critical materials for the energy transition and high-efficiency power electronics in the face of rising geopolitical uncertainty.

The ripple effects of the tariffs also changed customer purchasing behavior and procurement strategies. End-users in the automotive, aerospace, and energy industries - particularly those transitioning to SiC-based technologies for their superior thermal conductivity and energy efficiency - began seeking greater supply chain transparency and alternative sourcing models. Long-term supply agreements (LSAs) became more common, with OEMs directly partnering with SiC manufacturers to secure material availability and pricing stability. This created new dynamics in the market, elevating the importance of domestic and regional suppliers capable of meeting high-volume and high-spec demand without exposure to tariff-related volatility.

In parallel, research and development in alternative materials and new fabrication techniques accelerated, partly fueled by the financial and operational disruptions caused by tariffs. Companies began investing more aggressively in refining SiC crystal growth methods, such as physical vapor transport (PVT) and chemical vapor deposition (CVD), to reduce material waste and improve yield. Efforts to scale 200mm SiC wafer production also gained momentum, aimed at meeting the rising demand from electric vehicles and power electronics while reducing per-unit costs. These innovations were not only strategic for navigating the tariff environment but also essential for staying competitive in a rapidly growing global market.

Geographically, the U.S. and Europe positioned themselves for strategic advantage. Wolfspeed, for example, opened the world’s largest SiC fabrication facility in New York, while STMicroelectronics invested heavily in SiC capacity in Italy and France. These investments were often supported by national industrial policies and energy transition strategies aiming to secure domestic supply of critical materials. Meanwhile, China—facing U.S. tariffs and its own domestic push for self-reliance—poured funding into local SiC startups and research programs, aiming to maintain its lead in cost-effective SiC crystal production. As a result, the post-Trump era has not only fragmented global supply chains but also ushered in a new era of regional SiC competitiveness, with long-term implications for global technology development and trade.

Related Reports:

Silicon Carbide Market by Device (SiC Discrete Device, SiC Module), Wafer Size (Up to 150mm, >150mm), End-use Application (Automotive, Energy & Power, Industrial, Transportation), Material, Crystal Structure and Region - Global Forecast to 2029