Key Takeaways:
The shift to high-voltage power architecture in AI data centers is creating a clear market divide for compound semiconductors: silicon carbide on the facility side, gallium nitride inside the rack, according to a research report from China International Capital Corp. published in late June.
"High-voltage architecture is the confirmed direction for data center power systems as AI compute moves toward higher density, continuous full-load operation and strong transient冲击," CICC analysts wrote in the report, which identifies 2026 as the deployment元年 for the new power topology. The bank expects SiC to dominate gray-area (facility-side) power conversion — including solid-state transformers, power supply units and energy storage systems — while GaN penetrates white-area (rack-level) applications such as intermediate bus conversion and processor power management.
The market opportunity is substantial. Infineon Technologies AG, which Gartner identified in a May 2026 report as "the company to beat" in AI data center power semiconductors, projects €2.5 billion in AI market revenue for its fiscal year 2027. The German chipmaker's "grid-to-core" portfolio spans every conversion stage, from solid-state transformers to processor-level power management, using SiC for high-voltage grid-to-rack conversion and GaN for high-frequency intermediate stages.
The timing aligns with surging electricity demand. Meeting expected US demand growth through 2030 with a fossil fuel-heavy approach would add $30 billion annually to customer bills, according to modeling from Energy Innovation. An accelerated clean energy pathway — including the efficiency gains from wide-bandgap semiconductors — would cut that cost by $5.1 billion annually, a 17 percent savings. In a fuel price spike scenario, the savings would rise to $8.4 billion.
SiC and GaN carve distinct roles
The CICC framework draws a clean boundary at the data center's physical layout. SiC devices, built for high-voltage and high-temperature operation, are best suited for the facility side where power enters the building at 800 VDC or higher and must be converted efficiently. GaN, with its ability to switch at higher frequencies in smaller form factors, fits inside the rack where space is tight and power density demands are extreme.
This mirrors the broader market trajectory. The global digital power controllers market is projected to expand at a compound annual growth rate of 7 percent to 9 percent from 2026 to 2035, according to IndexBox, driven by data center electrification and wide-bandgap adoption. Wide-bandgap semiconductors are expected to grow from about 15 percent of digital power controller units in 2026 to nearly 30 percent by 2035.
Navitas Semiconductor, a fabless GaN power IC specialist based in El Segundo, California, is one direct beneficiary. The company's GaNFast power ICs integrate transistors, drivers and protection into single-chip solutions targeting data center power supplies, among other applications. Infineon, Texas Instruments and STMicroelectronics are also investing heavily in digital power controllers with embedded GaN and SiC capabilities.
Investment implications
For investors, the CICC thesis provides a thematic framework for sector rotation into compound semiconductor plays. Infineon trades as a broad-based power semiconductor leader with exposure across the full AI power chain. Navitas and other GaN specialists offer pure-play exposure to the rack-level opportunity, while Wolfspeed Inc. and ON Semiconductor Corp. are positioned in SiC for facility-side applications.
The key risk is execution. Building new generation capacity faces barriers including transformer and switchgear supply chains, permitting delays and local opposition. About half of data centers planned to come online in 2026 have been delayed or canceled, according to industry reporting, partly because of these bottlenecks. If demand growth slows, the clean energy pathway still saves $2.6 billion annually versus fossil fuels even if only 33 percent of expected demand materializes, Energy Innovation's modeling shows.
The CICC report's "SiC left, GaN right" framing gives investors a clear map of which companies benefit at which layer of the data center power stack — and 2026 marks the year the architecture shift begins in earnest.
This article is for informational purposes only and does not constitute investment advice.
