By Richard Eden, Principal Market Analyst, Power Semiconductors, IHS Markit
- This year’s PCIM Europe show was attended by more than 12,000 visitors, a record number. Over half, at 54 percent, were from outside Germany.
- Many discrete power semiconductor suppliers reported double-digit growth for the third consecutive year in 2018. But the market began to slow in the third quarter of 2018, with declines continuing through the fourth quarter and the first quarter of 2019. Clearly, 2019 will not bring the industry growth seen during the previous three years, but is this a temporary market readjustment or the start of a longer decline? The consensus is that 2019 will be disappointingly flat with only about +/-2 percent growth from 2018. But suppliers are optimistic that growth will return in 2020.
- Shortages of commodity products, such as MOSFETs, discrete IGBTs, and rectifiers, which started early in 2017, ended in late 2018. The shortages had caused some end-customers to over-order or double-order components in 2018, but by the first quarter of 2019 it became clear that there was little or no real demand for those parts from most sectors. End-customers started to push out deliveries in the winter of 2018-2019. The distribution supply chain is trying hard to absorb these adjustments.
- In last year’s PCIM research note, IHS Markit correctly anticipated slower demand for power semiconductors in 2019. This is helping alleviate the shortages of discrete power semiconductors, commodity mixed-signal ICs and silicon wafers.
Sectors sending out mixed signals
- Application sectors are sending out diverging signals on the prospects for 2019. For example, the industrial market is slowing for items such as motor drives, but heavy-duty industrial fans and blowers are experiencing higher growth. In automotive, vehicle production is slowing, but the hybrid and electric vehicle sector is doing better. The latter sector is very important to silicon carbide (SiC) power module companies, which are seeing new powertrain inverter projects starting now, for mass production in about three years.
- The consumer electronics sector is doing quite well globally—but is struggling in China. The wind energy market is declining somewhat, especially in Europe, but the solar energy industry is growing again after a bad year in China in 2018.
- The shortages of discrete power semiconductors were also affecting the independent power module assembly companies. The module assembly companies rely on semiconductors from third-party suppliers, but lead-times and production allocation now have returned to normal.
The looming US-China trade war
- A trade war between the United States and China has started to intensify recently as the two governments have imposed an increasing number of tariffs on imported goods. For the time being, the semiconductor industry has been relatively unaffected by direct action, but there is rising uncertainty that’s threatening or delaying investment in the sector. Several semiconductor IDMs are questioning whether to invest in fabrication plants in China or move them to Vietnam, Thailand or other low-cost Asian economies, to avoid any future U.S. tariffs on goods imported from China. Future planning concerns are holding the semiconductor market back now, especially for the consumer electronics sector.
- Whether the trade war is to blame or not, customers mentioned that China’s regional semiconductor market is faring worse than EMEA and the Americas. This was noted by both local Chinese manufacturers and western companies exporting into China.
SiC power gears up for growth
- There is a fear that suppliers of silicon carbide (SiC) power semiconductors will not be able to obtain sufficient quantities of SiC substrate wafers to allow production of enough chips to keep pace with the rapidly increasing demand in the future.
- However, supply concerns were alleviated by Cree, which announced that it will invest $1 billion in the expansion of its SiC wafer production capacity with the development of a new fabrication facility and a materials mega factory at its headquarters in Durham, North Carolina. This marks the company’s largest investment to date in its Wolfspeed SiC power and GaN-on-SiC RF business.
- The Cree announcement follows on from PCIM 2018, when ROHM Semiconductor announced that it was building a new SiC device fab, ROHM Apollo Fukuoka. This fab was intended to increase ROHM’s SiC device production capacity by 16-fold.
- Chinese company CRRC Times Electric is opening a 150mm SiC production fab in Zhuzhou. It is conducting batch qualification testing now, with a plan to launch its first SiC devices during 2019. It is also setting up the Times Electric Innovation Centre (TEIC) in Birmingham, UK, close to its automotive and traction customers and where well-trained engineers can be recruited.
GaN power developments continue
- The number of GaN power semiconductor products on show at PCIM also increased. Efficient Power Conversion Corporation (EPC) joined other leading GaN power semiconductor suppliers, such as Exagan, GaN Systems, Infineon Technologies, Panasonic, Transphorm, VisIC Technologies, and, for the first time, Alpha & Omega Semiconductor, Tagore Technology and Vishay Intertechnology.
- In a move with similar motivations to the Times Electric Innovation Centre mentioned above, Exagan has opened a Power Solutions Centre in the CEA building in Toulouse to extend its applications support.
- Vishay Intertechnology showed its first 100V GaN power device, which is being sampled to selected customers now. Production is scheduled for late 2019.