The shift in data centers towards an 800V high-voltage direct current architecture, combined with the massive expansion needs of power grids, is opening a historic growth window for semiconductors like silicon carbide (SiC) and gallium nitride (GaN).
According to a recent JPMorgan research report, the AI power semiconductor market is projected to expand from approximately $2.7 billion in 2025 to around $16 billion by 2028, representing a three-year compound annual growth rate of roughly 82%. In an optimistic scenario, the market size could surpass $20 billion. This forecast is based on a prediction of up to 80GW in global new AI data center capacity by 2028, alongside an assumption of semiconductor content of about $250 per kilowatt.
Two core drivers are propelling this growth: first, the systematic transition of data centers to an 800V HVDC architecture, which will significantly increase the semiconductor content per kilowatt. Second, across the entire power chain from the grid to the server rack, electromechanical components are being comprehensively replaced by semiconductor-based solutions. The semiconductor content per kilowatt for SiC is expected to rise long-term from $30 currently to $60, while GaN content is projected to leap from $3 to $46, a particularly notable increase.
Market Scale: 82% CAGR Over Three Years, Targeting $16 Billion by 2028
JPMorgan predicts that global new AI data center capacity will reach about 80GW by 2028, with roughly 63GW from new builds and around 18GW from replacements. Based on a baseline of 65GW in new compute capacity and an average semiconductor content of $250 per kilowatt, the AI power semiconductor market is projected to reach approximately $16 billion in 2028. This represents a compound annual growth of about 82% over three years from an estimated $2.7 billion in 2025.
Current semiconductor content per kilowatt is around $175, with guidance provided by companies ranging from $100 to $250, depending on architectural choices. As vertical power delivery modules become widely adopted, solid-state transformers and solid-state circuit breakers are deployed at scale, and higher-priced GaN devices penetrate the market, the content is expected to move towards the upper end of that range and beyond.
Breaking it down by material, silicon remains the largest dollar pool, with a projected market size of about $11.2 billion in 2028; SiC is forecast at $3.1 billion, and GaN at $1.7 billion. Although silicon has the largest volume, the growth rates for SiC and GaN far outpace silicon, and they are expected to continue gaining market share.
Architectural Revolution: 800V HVDC Reshapes the Power Chain, Boosting Semiconductor Content
Current data center power architectures suffer from significant efficiency losses. From the grid to the GPU chip, power must pass through four to five conversion stages—transformer, UPS, PDU, server power supply, and voltage regulator module—resulting in an end-to-end efficiency of only about 85% to 88%. This means 12 to 15 kilowatts of power per 100kW rack is dissipated as wasted heat.
The 800V HVDC architecture reduces copper losses and Joule heating losses by increasing voltage and lowering current. This new architecture eliminates the double-conversion UPS, rack-level step-down transformers and PDUs, and individual AC-DC power supplies per server. It instead introduces centralized high-power AC-DC rectifiers, rack-level 800V-to-low-voltage DC-DC converters, and DC-native battery backup units.
The migration is seen unfolding in three phases: In the present phase, traditional 215V to 400V AC architectures still dominate, with native 800V racks not yet widespread and retrofitting underway. In the short-to-medium term, native 800V racks are expected to begin scaling in volume, with significant market traction not anticipated before 2028. In the medium-to-long term, solid-state transformers will directly convert medium-voltage AC to 800V DC, integrating transformer and rectifier functions, with large-scale deployment not expected before late 2027 or early 2028.
It is important to note that while the new architecture reduces the number of conversion stages, each remaining or newly introduced stage heavily relies on advanced semiconductor devices, leading to an overall increase, not decrease, in total semiconductor content.
SiC and GaN: Defined Roles and Dominant Positions
Within the 800V architecture, SiC and GaN are expected to form a clear division of labor across different voltage ranges.
SiC is set to dominate high-voltage applications from the grid to the rack. In high-voltage scenarios such as solid-state transformers, solid-state circuit breakers, and energy storage systems, SiC, with its extremely high breakdown electric field and superior thermal conductivity, becomes an indispensable core component. The market for SSTs is projected to exceed $1 billion by 2030, with SSCBs expected to surpass $800 million. Centralized AC-DC rectifiers are also built around high-voltage SiC MOSFETs as their core.
GaN demonstrates unique advantages in the Stage 1 conversion, stepping down from 800V to low voltage. 650V GaN HEMTs, leveraging very high electron mobility, can operate at MHz frequencies, enabling smaller passive components and higher power density. Platforms have been introduced achieving 98.5% peak efficiency for 800V-to-50V conversion, with more aggressive single-stage 800V-to-6V solutions reaching 96.5% efficiency and a power density of 2100 W/in³. GaN content per kilowatt is projected to rise long-term from $3 currently to $46, an increase of over 15 times.
Silicon-based devices are expected to maintain dominance in the Stage 2 voltage regulation stage. VRMs need to deliver hundreds or even thousands of amps of current to GPUs at very low voltages and respond with nanosecond speed to drastic load fluctuations from GPU compute cycles. In this stage, low-voltage silicon MOSFETs, with their combined cost and performance advantages, are difficult to replace, though the rise of vertical power delivery modules is increasing unit prices by 3 to 4 times.
Grid Expansion: AI Drives Infrastructure Investment, Energy Storage Emerges as a New Growth Frontier
The explosive growth of AI compute power is simultaneously driving demand for grid expansion. Global data center power demand is forecast to reach 240-280GW by 2030, more than doubling from about 115GW in 2025. Global grid capital expenditure is projected to exceed $470 billion in 2025, with the United States contributing approximately $115 billion. Total global energy transition spending is estimated at $2.3 trillion.
Energy storage systems are becoming a crucial component of AI power infrastructure. AI workloads can cause a single server rack's power draw to surge from 30% idle to 100% load within milliseconds. Aggregated across an entire data center hall, this means hundreds of megawatts of power fluctuating violently within seconds. ESSs must evolve from a passive backup role to an active buffer layer, isolating the chaotic power demands of GPUs from the grid. Data centers are projected to account for 83% of commercial and industrial behind-the-meter energy storage deployments by 2030.
Regarding semiconductor content, each ESS requires a bidirectional inverter built around power modules using IGBTs or SiC. The semiconductor content for ESS is estimated to exceed 2000 euros per megawatt. With global ESS shipments projected to reach about 1500GWh, corresponding to roughly 375GW of power capacity, the potential market size is estimated at approximately 750 million euros.
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