Lead times for power discrete semiconductors, including MOSFETs, diodes, rectifiers and thyristors, have stretched significantly in 2017 due to increased demand particularly from automotive and industrial applications, according to market experts. For some devices, lead times have stretched to 24 to 30 weeks.
Diodes, rectifiers, and low- and high-voltage MOSFETs are currently posing the biggest supply issues for buyers. Demand has ramped up faster than forecast this year, causing suppliers to be caught off-guard, according to market analysts.
Many suppliers for power discrete semiconductors said they are seeing their best growth this year since 2012, led by automotive applications, said Richard Eden, senior analyst, power semiconductors at IHS Markit. As a result, lead times are starting to increase with factory capacity allocations for certain products, such as MOSFETs, thyristors and rectifiers, he added.
Typical lead times for MOSFETs, rectifiers and thyristors are around eight weeks, said Eden. However, lead times for some MOSFETs, rectifiers and thyristor products are stretching out to 24 to 30 weeks.
Eden is surprised that lead times have stretched for older technology thyristors, which are not used for many new designs. They are mostly used in industrial applications, and not automotive, which use MOSFETs and rectifiers, he explained.
“Automotive demand is driven by the amount of electrification in vehicles - more towards electric power steering, electric fuel pumps, electric motors for windows, sunroofs, etc., which is more important than the increase in hybrid and electric vehicles, which is growing fast but is still a small market,” Eden said.
“The industrial market is controlled more by macroeconomic conditions - business and economic confidence including investment plans for building factories,” Eden said. “But it’s the production equipment and factory automation that drives power semiconductor demand in industrial applications,” he added.
The distribution channel started to see lead times extend for several types of power discrete devices in 2016 due to strong global demand.
“Lead times for diodes and rectifiers began to extend in mid-2016 and then again in early 2017 due to an interruption in supply from a major manufacturer coupled with a strong global demand for these products,” said Jeff Ray, vice president – corporate product, TTI Americas.
“The strong 2017 market also led to low-voltage and high-voltage MOSFET lead-time extensions, but these extensions have been less pronounced than for diodes and rectifiers, while IGBT, small signal transistor and bipolar transistor lead times have been flat throughout 2017,” added Ray.
Ray said lead times for TVS diodes are at +30 weeks, while lead times have extended for small signal diodes and rectifiers to 18 and 25 weeks, respectively. “In comparison, in mid-2016, TVS diode lead times were 14 weeks; small signal diodes lead times were 12 weeks, and rectifier led times were as low as 10 weeks,” he said.
“These three product categories, while not on official allocation by all suppliers, are certainly in a constrained supply situation,” Ray added.
Deliveries also have stretched for zener diodes, RF diodes and ESD diodes. These all fall in the 16 to 20 week lead-time range, compared to normal lead times of closer to 12 weeks, said Ray.
MOSFETS also pose a big challenge. Lead times are currently 24 weeks for low-voltage MOSFET, while high-voltage MOSFETs and IGBTs lead times are at 18 weeks, said Ray. “However, low- and high-voltage MOSFET lead times are continuing to extend. More typical lead times for MOSFETs are in the 14 to 16 week range,” he said.
The bright spot in the power discrete market is stable lead times of 14 to 16 weeks for small signal and bipolar transistors.
Eden expects the supply chain issues to be short term and resolved before year end. But if demand continues to increase, these extended lead times could stretch into 2018, he said.
“The problem is that it is not a quick job to increase manufacturing capacity,” said Eden. “Within a company, semiconductor production per wafer is finite. If you want to make more diodes, which cost a couple of cents, you have to stop making other more expensive devices. Or you build new fabs, which take years and cost millions of dollars. When in-house capacity is full, the usual solution is to outsource capacity by using foundry services.”
Component manufacturers are ramping up production, including Vishay Intertechnology.
Shortages of supply for diodes continue to drive orders particularly through distribution, and the backlog keeps increasing drastically to 5.8 months in Q2 from 4.8 months in Q1, said Dr. Gerald Paul, president and chief executive officer, Vishay Intertechnology, during a Q2 earnings call. MOSFETs are in a similar situation as diodes with the backlog increasing to 5.2 months in Q2 from 4.4 months in Q1, he added.
“We are expanding manufacturing capacity for all critical lines as fast as we can, and also to prepare for mid- and long-term success of the product lines,” said Paul. “We are in the process of increasing manufacturing volume at foundries and maximizing the output of our fab in Itzehoe, Germany,” he added.
Paul also noted that it will take time to add capacity. “From our perspective, the shortage situation will not be turned around quickly. But normally high backlogs like we have do not survive forever.”
Rising global demand is also driving improved market growth. IHS Markit increased its forecast for power discrete semiconductors to seven percent in the second quarter of 2017, up from five percent in the first quarter. Power discretes include power transistors, bipolar transistors, IGBTs, MOSFETS, thyristors, rectifiers, and diodes, and account for 33 percent of the global power semiconductor industry.
The increase was based on growth for end equipment using these devices in combination with feedback from suppliers, said Eden.
Eden said certain MOSFETS and some rectifier diodes primarily being supplied to automotive and industrial markets are growing at faster rates. “These are higher spec parts with fewer suppliers who can supply the right parts.”
An energy-efficient trend found in the factory automation market, in particular, is driving growth for discrete power transistors, thyristors, rectifiers and power diodes. The market for these devices is expected to reach $8 billion in 2021, up from $5.7 billion in 2015.
The total market for power discrete semiconductors and power modules was approximately $20.5 billion in 2016, and will grow to nearly $22 billion in 2017, Eden said.
The IHS 2016 report, Power Semiconductor Forecast Report, 2016 Edition, forecasts power discrete products to grow at a compound annual growth rate (CAGR) of three percent from 2015 to 2020. The power module and power IC segments are forecast to grow at a five percent and 2.8 percent growth rate, respectively.
Global sales for the total power semiconductor market was roughly $34 billion in 2015. The largest segment of the market is power ICs, pegged at 50 to 56 percent of the share, according to market analysts.
The power IC market is forecast to reach $18 billion in 2022, up from $14.5 billion in 2016, according to the latest data from Yole Développement (Yole), growing at a CAGR of 3.6 percent over the forecast period of 2016 to 2022.
The automotive and industrial markets are also expected to drive growth for power ICs, particularly for the power management IC segment, according to Yole’s Power Integrated Circuit 2017 - Quarterly Update.
“The increased electronic and semiconductor content per vehicle instead of increased unit shipment is the key driving trend for power ICs in the automotive market segment,” said Jonathan Liao, senior analyst & business development manager, Yole Développement.
“The key driving sub-segments inside automotive are advanced driver assistance system (ADAS) and the electrification of the powertrain,” Liao added. “For the industrial end markets, there are a few driving applications such as medical devices, renewable energies, automations, and building/home controls.”
But supply issues haven’t impacted the power IC industry. “In the near term, supply and lead time issues were not significant for power ICs in most of the applications we covered, primarily due to the mature competitive landscape and well-established supply chain,” said Liao.
“However, emerging technologies such as new materials and packages can have a significant impact on fledgling supply chains.”
Planning for a Seller’s Market
Although supply issues for power discrete semiconductors are expected to resolve by the end of 2017, buyers should prepare for extended lead times into 2018.
While distributors can help buyers with stocking programs to ensure supply, at some point there will be inventory challenges, said Ray. “As these products are heavily supplied through the channel, the inventory challenges for these products has been consistent with the overall market in magnitude as well as length of time/duration.”
“I do expect the extended lead time of power semiconductors to continue throughout 2017 and I would speculate that we have not seen the full extensions of these lead times at this juncture,” said Ray.
“Although strong market conditions have contributed to some of the lead times extensions we are experiencing, there has also been an interruption in the supply of these products by a major diode and rectifier manufacturer,” said Ray. “These two factors could both be categorized as temporary, which has not motivated manufacturers to add capacity to address the upside in the power discrete market.”
Like any market when there are shortages, buyers could face price hikes at their next contract negotiations. If they are buying in the spot market, they are likely already seeing higher tags.
“Without question, ‘new’ buyers - as well as more seasoned buyers with short memories - will have to be much more aware of product availability when obtaining pricing on power discretes,” said Ray. “For the last decade, pricing and gross margins have been reduced based upon the very flat and competitive landscape that was flush with product. For the back half of 2017 and possibly the first half of 2018, securing product should be the customers’ primary objective.”
The best advice offered by market experts to survive a shortage situation is to prepare ahead. This includes easing up on price reduction demands - suppliers have a long memory and will remember when it’s crunch time – and building long-term relationships.
When lead times reach the 30-week range the industry starts talking about allocation. “That’s when suppliers say they can’t make everything for everybody so they pick and choose what they make and who they deliver to and tell the other customers they will have to wait longer,” said Eden.
“No one sees the problem going to the end of the year and it should be resolved by autumn but Q3 production is usually the biggest quarter of the year,” added Eden. “If we are already seeing these problems in Q1 and Q2, they could easily extend into Q3, and with lead times this long it’s not going to be resolved until Q1 of next year.”
“No one is panicking but certainly you need to be aware of it,” he said.
Another supply issue to keep an eye on are reports of a supply shortage for 8-inch silicon wafers. Many power discrete semiconductors and modules are produced on older 6- and 8-inch wafers, which could contribute to lead time and pricing challenges.
However, the SEMI Silicon Manufacturers Group (SMG) announced in July that global shipments of silicon wafers increased by 4.2 percent in the second quarter of 2017, compared to the first quarter. Total silicon wafer area shipments grew from 2,858 million square inches in Q1 to 2,978 million square inches in the second quarter.
Shipments were 10.1 percent higher than the second quarter in 2016, reaching their highest recorded quarterly level, according to SEMI. The record level increases are attributed to 200 mm (8-inch) and 300 mm (12-inch) shipments.