· The global market for power semiconductor discretes, power modules and power integrated circuits (ICs) has enjoyed two years of expansion, growing 3.9 percent in 2016 and expectations of 7.5 percent growth in 2017
· Revenue from power discretes and modules grew 5.3 percent in 2016, with a forecast of 8 percent growth in 2017
· Revenue from power ICs grew 2.8 percent in 2016, rising to an expected 7.1 percent growth in 2017
· The total power semiconductor market is forecast to continue to grow at a slower rate of 4.1 percent in 2018
The largest markets for power semiconductors in 2018 will be the industrial and automotive sectors. In fact, revenue from the industrial sector is projected to surpass $10.5 billion in 2018 primarily due to power modules used in industrial motor drives and solar-photovoltaic inverters. In addition, the conversion to energy-efficient technologies of building security and connected lighting and other industrial lighting systems increases demand for power ICs and discretes.
Revenue from power semiconductors in the automotive sector is forecast to exceed $7.1 billion in 2018, with growth coming from all vehicle areas: infotainment, chassis and safety, and advanced driver assistance systems (ADAS). Growth in power modules will come from powertrain inverters used in hybrid and electric vehicles and in electric power steering in larger cars and light trucks with conventional internal combustion engines. Growth for power ICs will be particularly strong in ADAS applications in 2018, becoming the third largest sub-segment, after chassis and safety systems and powertrain applications.
The next largest revenue sectors for power semiconductors in 2018 are consumer electronics ($6 billion) and wireless communications ($7 billion). Consumer market growth is fueled by shipment growth of high-end TVs, set-top boxes, home appliances and power adaptors for wearable devices. It will be boosted further, thanks to increasing shipments of smart, connected appliances and the use of variable motor-speed control in appliances. The wireless communication segment is dominated by power-management devices (PMICs) for mobile handsets and tablets - delivering more power when higher performance is needed and less power when devices are idle.
Two contradictory trends in discrete device voltage power ratings appear likely in 2018. For discrete power metal-oxide-semiconductor field-effect transistors (MOSFETs), revenue from low-voltage (LV) MOSFETs (less than 40 volts) is expected to increase slightly faster than for total MOSFETs; but revenue from high-voltage (HV) MOSFET (greater than 400 volts) is expected to grow even faster. LV MOSFETs are used extensively on PC motherboards and in automotive vehicle systems.
HV MOSFET revenues are mostly driven by the industrial sector. SuperJunction MOSFETs now account for over half of HV MOSFET shipments. Furthermore, although silicon carbide (SiC) MOSFET revenue is only about 3 percent of the total MOSFET market, it is expected to grow by over 40 percent in 2018, fueled by its use in hybrid and electric vehicles, PV inverters and other industrial segments.
Efficient power management is the theme for power ICs in 2018. New system architectures are improving efficiency of AC-DC power adapters, while also reducing size and component count. New standards for Power-over-Ethernet (PoE) allow higher power transfer, which enables new classes of devices, like connected lighting. USB-type C devices now need architectures to manage bi-directional power transfer. Hybrid and electric vehicles require many battery-monitoring ICs, to ensure battery safety and eliminate range anxiety. These trends are leading the growth of specialized application-specific power management devices (ASSPs), with revenue growing at twice the rate of general-purpose power ICs.
Challenges in the supply chain
There were also some supply challenges for discrete power semiconductors in 2017, as demand exceeded factory capacity delivery, and as lead times increased for MOSFETs and rectifiers, in particular. Semiconductor manufacturers were squeezed from both sides: customer demand exceeded factory capacity, and silicon wafer shortages affected production. A transition to larger wafer sizes could eliminate some of the shortages, but the supply chain is not aggressively doing so, choosing to benefit from higher prices before expanding capacity.
Most SiC power semiconductor manufacturers have migrated production from four-inch to six-inch SiC wafers in the last two years, because twice as many devices can be made from larger wafers, but they do not cost double the amount. However, fewer wafer suppliers are able to produce good quality six-inch SiC wafers. This has led to shortages of six-inch SiC wafers, which has increased lead times for SiC devices from some non-vertically-integrated suppliers.
Consolidation to continue, but at a slower rate
The trend for large semiconductor companies to buy smaller ones, which started in 2014, continued during 2017, but at a slower rate. During 2017, Renesas Electronics acquired Intersil; NXP’s Standard Products Division was spun off to create Nexperia; Analog Devices bought Linear Technology; MaxLinear purchased Exar; Littelfuse agreed to buy IXYS Semiconductor; and Dialog Semiconductor acquired Silego Technology. Also, II-VI Incorporated bought Kaiam Laser Limited, a UK-based six-inch wide-bandgap wafer fabrication facility, destined to increase its global six-inch SiC wafer production capacity. Also relating to SiC wafer production was Showa Denko’s (SDK) purchase of SiC wafer manufacturing assets from Nippon Steel & Sumitomo Metal Corporation.
First announced in October 2016, the acquisition of NXP Semiconductors by Qualcomm Inc. is still yet to be completed. Final regulatory approvals are now not expected until sometime in 2018. To complicate matters, Broadcom launched a hostile takeover bid for Qualcomm in November 2017. Broadcom communicated its desire to acquire Qualcomm, whether or not the NXP purchase goes through; however, given the strategic differences between the two deals, the outcome is far from certain.
One business ripe to be sold is Wolfspeed, the power and RF division of Cree, Inc. Wolfspeed’s sale to Infineon Technologies failed in February 2017, because of national security concerns of the Committee on Foreign Investment in the United States (CFIUS). It appears Cree still wants to sell Wolfspeed, and the recent appointment of semiconductor industry veteran Greg Lowe as the new CEO of Cree, Inc. only encourages speculation, since Lowe was the CEO who sold Freescale to NXP in 2015.
The news that Apple may start using in-house PMICs in future iPhones, iPads and Apple Watches hit the share price of Dialog Semiconductor, Apple’s incumbent supplier, which could now become a hostile takeover target. With interest rates still low, the Chinese government encouraging foreign semiconductor acquisitions and with many companies flush with cash, more deals are certainly possible. Potential power semiconductor acquisition targets are Maxim Integrated, Silicon Labs, Power Integrations and smaller companies with connection technologies suitable for the internet of things (IoT).
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