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Could merger mania be headed to the power electronics industry? The acquisition of IXYS by Littelfuse may mark the start of industry consolidation in the mature insulated-gate bipolar transistor (IGBT) market, according to Yole Développement.
Yole analysts believe the leading position of Infineon is forcing IGBT suppliers to bolster their technical expertise and market position through partnerships or acquisitions.
Even though the power discrete and module segment is a mature market, it is dominated today by Infineon, which has two times the revenues of the second-ranking manufacturer for these products, said Dr. Pierric Gueguen, business unit manager, Yole Développement. “In such a market, this position is not suitable in the long term. We expect the market to continue to consolidate in order to get some more assets to compete against the market leader. The IXYS acquisition is one example as well as the Fairchild acquisition by ON Semiconductor last year.”
“With the IXYS acquisition, Littelfuse confirms its presence and position as an IGBT supplier,” added Gueguen. “Littelfuse will benefit from IXYS device designs and module packaging knowledge as well as a strong patent portfolio to accelerate its technology development and revenues.”
Prior to the IXYS acquisition, Littelfuse acquired ON Semiconductor’s IGBT product line in September 2016. The business generated less than $25 million in revenue in FY2015.
The majority of the IGBT players offer both discrete and module solutions in the 600V to 1300 V medium-voltage range, which accounts for more than the 60 percent of the global IGBT market, said Yole.
“Only a few players work exclusively on low-voltage discrete IGBTs, such as Microchip or Sanken, while several players, like Mitsubishi or Hitachi, sell only module solutions,” according to the report. “Big players like Infineon, Fuji, ON Semiconductor or Toshiba lead in both low- and medium-voltage IGBT discrete and modules mainly up to 1.7 kV, and Mitsubishi dominates in high-voltage IGBT manufacturing from 2.5 kV.”
New designs are expected to come from the major players including Infineon, Fuji and ABB. Some recent improvements cited include embedded techniques for discrete IGBTs and over-molded solutions for IGBT modules to reduce size or increase functional density.
IGBTs are one of the few product segments in the power IC industry that aren't facing long lead times. When consolidation occurs in a component sector, buyers have to be concerned about product lines being discontinued, stretching lead times, and rising prices.
Gueguen believes the acquisition will lead to more competition. “This acquisition will lead to a more competitive landscape in the power discrete and module market; the market is not consolidated enough to see rising prices,” said Gueguen. “It will have a beneficial impact in R&D capabilities to develop new technologies and innovate. Littelfuse started a few years ago the development of a silicon carbide device. Such a step forward will accelerate technology maturation and adoption rate.”
The IGBT market is forecast to reach more than $5 billion 2022, up from $3.4 billion in 2016, according to Yole’s IGBT Market & Technology Trends 2017 report. The market is expected to grow at a compound annual growth rate of about 8.3 percent from 2016 to 2022. A good portion of the growth is expected to come from IGBT power modules.
Gueguen forecasts double-digit growth in the IGBT market in 2017 with the major growth coming from IGBT power modules. “Vehicle electrification is one of the main driving forces in the market growth. EV/HEV is expected to represent over 40 percent of the whole IGBT market by 2022,” he said.
During a recent conference call, Littelfuse’s CEO & president Dave Heinzmann said the IXYS acquisition is the largest in its history and aligns with several key areas of its strategy including accelerating its growth in power control.
“The IXYS extensive power semiconductor portfolio and technology expertise aligns with the key objective to accelerate our growth across power control. It diversifies and expands our presence within industrial and electronics markets, with a tremendous OEM customer base,” said Heinzmann.
“We also expect long term increased content per vehicle by expanding our combined power semiconductor portfolio with automotive customers. These were all areas we identified as significant elements of our 5-year strategy. The combination is highly complementary in many areas, including technology capabilities, product portfolio, end markets and sales channels. The combination will also bring many more opportunities for our collective employees and new differentiated solutions for our customers. We look forward to welcoming the IXYS team to Littelfuse.”
“The power semiconductor business sits across several high-growth markets, driven by the macro trend of electrification. With that comes a growing demand for energy conversion, efficiency and reliability,” Heinzmann added. “Power semi products enjoy customized design cycles on longer platform life, especially within the industrial and automotive end markets. At the same time, given our strong position in the circuit protection market, this is a space where we can leverage our existing technology expertise and customer relationships to create significant value.”
With the acquisition, Littelfuse expands its role in the IGBT market and “clearly takes part in the market consolidation,” said Gueguen “Both companies have strong synergies. They have for example the same customers’ portfolio composed of the electronics, automotive and industrial companies. Under this merger, their aim is to propose a relevant combination of their technical expertise and create value for their common customers’ portfolio to become a key IGBT player.”
The acquisition also supports Littelfuse’s expertise in power module designs. Low inductance and good thermal performance become a “must-have” to sell power devices today,” according to the report.
“Power packaging is now a key knowledge that must be optimized to obtain good performance at the module level,” said Gueguen.
“Power packaging management will clearly accelerate the adoption of innovative technologies including wide band gap (WBG). Thus it is not a surprise to see many leading power electronics companies to move towards this level of the power electronics supply chain. For example, in the SiC area, Cree (today Wolfspeed) adopted this strategy with the acquisition of APEI in 2015. With both deals, Cree (with APEI) and Littelfuse (with IXYS) expanded their expertise towards the packaging technologies, especially for SiC.”
In March 2017, Littelfuse invested $15 million in Texas-based start-up Monolith Semiconductor, which is developing silicon carbide technology.
“With the IXYS acquisition and investments within Monolith Semiconductors, Littelfuse modifies its market positioning. The company adds another activity in its products portfolio - the development of SiC-based power electronics solutions,” said Nicolas Baron, CEO & founder, KnowMade, in a statement. “Based on its impressive patent portfolio including more than 400 patents and patent applications related to the power semiconductor industry, IXYS is showing a strong knowledge of IGBT modules packaging.”
Yole analysts believe Littelfuse will soon have the capability to produce SiC power modules. The IXYS and Littelfuse patent portfolios indicate their expertise and positioning focused on the IGBT market segment as well as their strategy to offer dedicated SiC-based products in a near future, according to Yole.
