Market conditions have changed in the power semiconductor market in 2013, and this is good news for suppliers. The market is expected to grow in the single digits in 2013, although some application sectors will grow faster or fall below the total market, said Victoria Fodale, senior semiconductor market analyst for IHS. Some power semiconductor manufacturers expect higher growth of about 10 percent for discrete devices particularly as more customers address power efficiency in their end products.
This follows a tough year in 2012 for many power semiconductor companies with overall global revenue dropping by almost 16 percent, according to IHS, due to several factors, including lower consumer demand, lower prices, and a slowdown in energy initiatives. Total revenue for power semiconductor discretes and modules fell to slightly less than $15 billion, down from nearly $18 billion in 2011.
Looking ahead, Fodale said suppliers still face ongoing challenges that "include changes in the component count for a particular application, changes to circuit topology, replacement of power components by other semiconductors, and changes in average selling prices."
It's important to note that the power semiconductor market is segmented into two distinct product areas: discretes and modules. Fodale said "there are notable differences in the types of end equipment in which these two types of semiconductor devices tend to be used."
Here's how IHS looks at the market: Discrete power semiconductors are used in automotive, cellular handsets and infrastructure, other communications, consumer, computer & office equipment, industrial, renewable energy, medical, lighting and transportation (traction). Power modules are typically used in industrial power drives, induction heating & welding, grid infrastructure, consumer, power supplies, traction, car & light trucks, other battery-driven vehicle systems, and renewable energy.
Applications that show the most promise as growth drivers heading into 2014 include mobile computing, server power supplies, and data centers, according to suppliers. Growth also is expected from still-emerging markets such as solid-state lighting (SSL) and electric vehicles.
Frost & Sullivan recently reported that electric vehicles, along with the need for more efficient power management and new safety features in the automotive market, will help drive future growth. The market research firm projects revenues for power semiconductors in the automotive industry will grow from $2.81 billion in 2012 to $5.28 billion in 2018, primarily due to growth for IGBTs and MOSFETS that are replacing bipolar junction transistors and thyristors. Regional growth will come from Asia-Pacific and Europe.
Future growth will likely be spurred by new technologies such as gallium nitride. "Several manufacturers are developing gallium nitride diodes and transistors grown on silicon substrate wafers, called GaN-on-SiC, and expect to launch them in the next two or three years," said Fodale.
However, Frost & Sullivan recently noted in a press release that the lack of advancements in the power semiconductor market has contributed to slower market expansion, although new technologies such as silicon carbide-based devices will be key areas for innovation.
But suppliers said materials development is ongoing and necessary for a healthy market. However, they have research & development concerns as they work on new materials including silicon carbide (SiC) and gallium nitride. In addition to understanding the technologies, themselves, power semiconductor manufacturers also have to look at where it makes sense to use the technologies and how cost effectively and reliably they can be used.
Power semiconductor manufacturers expect good growth from new product developments, particularly those directed at high-performance markets, which will allow them to garner higher average selling prices (ASPs) to combat the unavoidable price erosion for commodity parts. These innovations will include more highly integrated products.
One of the big winners in the power semiconductor market is Infineon. Over the past year Infineon has continued to up its game introducing a slew of new products and expanding existing lines. This includes the extension of its high-voltage portfolio with the CoolMOS C7 product family with a new 650-V Superjunction MOSFET technology, aimed at customers demanding higher energy efficiency.
Other new products include the 600-V CoolMOS P6 MOSFET family, fast switching IGBTs, SiC diodes, and new packages such as the TO leadless package for high-current applications. In 2014, Infineon plans to focus on medium-voltage parts from 80 V up to 250 V.
In addition to a variety of new products and technologies for next-generation end products, other good news for buyers is that pricing continues to drop. Power semiconductor makers report that ASPs for most products tapered off to about four percent in 2013 after experiencing sharp erosion in the first half of the year. Pricing was stable during the second half with the exception of the computing market, which has seen faster price declines, resulting in key players backing off from the market.
IHS projects that ASPs for discretes will decline by a compound annual growth rate of 2.3 percent from 2012 to 2017, which is a slightly higher rate of decline than was predicted in last year's report.
"In aggregate, ASPs tend to fall over time," said Fodale. "However, ASPs are more influenced by supply and demand for end equipment and, as such, they vary across the application sectors," she said.
Buyers also can expect stable lead times for the foreseeable future. For example, lead times, on average, for discretes range from about six to eight weeks to 10 to 12 weeks, although small commodity parts can be delivered with three to four weeks, according to some suppliers.