Analysis of Competitiveness and Investment Value of Gree Electric's Silicon Carbide (SiC) Chip Business

Based on collected data and industry information, I now present to you a complete analysis report.

Silicon Carbide (SiC), as a third-generation semiconductor material, is currently in an industry boom period. According to the latest industry data [1][2], the global SiC device market shows strong growth momentum:

• The growth rate of China’s SiC device market far outpaces the global average, with a CAGR of 58.64% [1]
• The automotive sector accounts for approximately 70.6% of the SiC application market, making it the largest application scenario [1]
• New energy vehicle main drive applications account for about 90%, serving as the core growth driver [2]

The global SiC device market presents an

• Chinese enterprises are rising rapidly; UNT achieved 188% YoY growth, while Sanan Integrated recorded 55% YoY growth [2]
• Approximately 90% of the China market is still dominated by overseas enterprises, leaving huge room for domestic substitution [1]
• Xilian Integration has become the top enterprise in domestic vehicle-grade SiC MOSFET product shipments [2]

Gree Electric has a clear strategic path for its cross-border semiconductor business [3][4]:

• Phase I Plan: Annual production capacity of
  240,000 6-inch SiC wafers
  [3]
• Production Line Configuration: 6-inch and 8-inch compatible equipment, fully automated overhead crane system
• Core Capabilities: SiC wafer manufacturing, power device packaging and testing, semiconductor testing services

• Yield rate of SiC power chips reaches
  99.6%
  [5]
• Production costs are
  18% lower
  than the industry average [5]
• The chip team has nearly 1,000 members, with technical personnel accounting for over 60% [4]

Gree’s SiC business adopts a phased expansion strategy of

Phase 1: Home Appliance Applications (Completed)
├── Air Conditioners: Installations and shipments exceed 2 million units
├── Energy Efficiency Improvement: Significant improvement in APF energy efficiency ratio
└── Energy Saving Effect: Supports energy efficiency upgrades of China's air conditioners/refrigerators

Phase 2: Industrial and New Energy (Mass Production in 2026)
├── Photovoltaic Energy Storage: Reduced temperature, improved energy efficiency
├── Logistics Vehicles: Application of SiC devices
└── Central Air Conditioning Chillers: Energy efficiency optimization

Phase 3: Automotive Chips (In Planning)
├── Target Customer: GAC Group (to supply half of its automotive chips)
├── Application Scenarios: Main drive inverters, charging modules
└── Certification Progress: Vehicle-grade testing service capabilities

• Self-developed SiC chips have a yield rate of 99.6%, with production costs 18% lower than the industry average [5]
• Leverages Gree’s home appliance scale effect to enjoy cost-sharing advantages
• The “independent controllable, open foundry” strategy reduces marginal costs

• The core home appliance business provides stable cash flow and market demand
• The photovoltaic energy storage business (Gree Titanium) forms synergy with SiC
• Vertical Integration: Full-stack capabilities from chip design to module packaging

• RMB 111.4 billion in cash reserves, providing continuous R&D investment support [5]
• Gree’s brand effect helps build customer trust

Based on the latest market data [0]:

• Gree Electric’s P/E is
  40% discounted
  compared to Midea Group, leaving room for valuation repair
• The high dividend rate (7.2%) is attractive in the current low-interest rate environment
• The semiconductor business is still in the investment phase, contributing limitedly to valuation

• Q3 2025 revenue reached USD 4.003 billion, lower than market expectations (USD 4.854 billion) [0]
• Q3 2025 EPS was $1.26, lower than the expected $1.44 (-12.5%)
• The stock price has fallen 13.91% in the past 6 months, underperforming the broader market

Since Gree Electric’s SiC business has not been disclosed separately, the segment valuation method is used for estimation:

1. Industry Level:
   SiC semiconductors are a high-growth track in a boom period, with China’s market recording a CAGR of over 58%, leaving huge room for domestic substitution.

2. Competitiveness Level:
   Gree Electric has cost and synergy advantages in the SiC field, but lags far behind leading enterprises in technical accumulation and market position, serving as a “follower”.

3. Business Progress Level:
   SiC chips for home appliances have achieved mass production, and will expand to photovoltaic energy storage and logistics vehicle sectors in 2026, while automotive chips are still in the early layout stage.

4. Valuation Level:
   The current P/E of 7.18x is at a historical low, with the high dividend rate providing a favorable safety margin, yet the semiconductor business is unable to contribute significant profits in the short term.

5. Investment Recommendation:
   Gree Electric is suitable for long-term allocation by stable investors; its main value lies in undervaluation and high dividends, with the SiC business providing long-term option value, but investors need to pay attention to transformation progress and performance fluctuation risks.

[0] Jinling API Data - Gree Electric (000651.SZ) Company Profile and Market Data

[1] Zhiyan Consulting - 2025 Global and China SiC Device Industry Market Size and Competitive Landscape Analysis (https://www.chyxx.com/industry/1241871.html)

[2] EET China - Global SiC Market Share Ranking Released, STMicroelectronics Remains Top (https://www.eet-china.com/mp/a435655.html)

[3] Sina Finance - Gree Electric’s Vehicle-Grade SiC Chips Will Enter Mass Production, Dong Mingzhu Says It Will Supply Half of GAC’s Automotive Chips in the Future (https://finance.sina.com.cn/tech/roll/2026-01-20/doc-inhhxqwv7222576.shtml)

[4] IT Home - Gree Electric’s Vehicle-Grade SiC Chips Will Enter Mass Production, Dong Mingzhu Says It Will Supply Half of GAC’s Automotive Chips in the Future (https://www.ithome.com/0/914/730.htm)

[5] East Money - Investment Value of Gree Electric at RMB 40: Doubao Analysis (https://caifuhao.eastmoney.com/news/20251013122216236128780)

[6] Xilian Integration Research Report - Domestic Vehicle-Grade Foundry Leader, Expanding SiC Production Capacity (https://pdf.dfcfw.com/pdf/H3_AP202508181729782980_1.pdf)

[7] Fortune Business Insights - Silicon Carbide (SiC) Devices Market (https://www.fortunebusinessinsights.com/zh/silicon-carbide-sic-devices-market-112103)