Electronic Enthusiast Network reported (text/Huang Shanming) that power semiconductors, as the core components of electric energy conversion and circuit control, are widely used in automobiles, consumer electronics, computers, network communications, industrial control and other scenarios. Among them, the demand for automobiles accounts for the highest proportion, nearly 40 %. However, China’s power semiconductor industry started late, and the localization rate is low. It coincides with the rise of the domestic substitution wave in recent years, and many companies have begun to enter the power semiconductor market. However, under this bright prospect, the Japanese media suddenly poured cold water on it, saying that China has greatly increased the production of power semiconductors, and there is already a risk of excess power semiconductors.

Japanese companies’ concerns

On May 16, according to Japanese media reports, China is substantially increasing production of power semiconductors that control power and voltage. SEMI Japan (Chiyoda District, Tokyo), a Japanese semiconductor industry group, has counted China’s semiconductor factory construction plans as of the end of February this year through its member manufacturing equipment manufacturers, and found that there are 22 new Chinese semiconductor manufacturers that have traded, of which 12 are power semiconductor factory.

For example, both Runxi Microelectronics and Fuxin Semiconductor have expanded their power semiconductor factories using 300mm diameter silicon wafers. SEMI Japan judges that the probability of these two factories advancing their factory construction plans will reach more than 80%, and these two companies also plan to expand their factories this year. Introduce Japanese semiconductor equipment for the expansion of the new factory.

In addition, it is also planned to introduce related Japanese semiconductor equipment manufacturers such as Jiejie Microelectronics, but the wafer size used is 200mm; Chengdu Hi-Tech Technology, which mainly produces DRAM, uses 300mm wafers.

From a technical point of view, the circuit microfabrication technology used by most new Chinese power semiconductor manufacturers is relatively mature, but the manufacturing process used is basically 90nm, and the processing technology threshold is relatively low. However, the production of power semiconductors requires technicians with rich experience in circuit design and manufacturing, but these newly built factories have mature systems and personnel to support the expansion of production.

In this regard, Japanese companies are more worried because although power semiconductors are the basic components that are expected to improve the energy-saving performance of equipment, the oversupply may lead to deterioration of the earnings of Japanese competitors.

For example, power semiconductor manufacturers such as Mitsubishi Electric in Japan still have great international competitiveness, but most of them use 200mm wafers for production, while domestic companies have turned to 300mm wafers, and one wafer can produce 2.25 times the chips of Japanese companies.

On the other hand, not long ago, Denso, a major Japanese auto parts manufacturer, stated that it would establish a major power chip production plant with Taiwan’s UMC. At the same time, Japanese manufacturers such as Toshiba and Mitsubishi Electric are considering expanding their 300mm wafer production facilities in recent years, and many major Japanese manufacturers have also begun to start production in the field of power semiconductors.

Some experts said that the small scale of Japanese chip manufacturers makes it difficult to expand production and marketing. Japanese manufacturers are also wary of making big investments lest their peers do the same and create an oversupply. The question now facing Japanese chipmakers is whether they can keep their niche.

In view of this situation, China’s large-scale investment in the field of power semiconductors undoubtedly worries Japanese companies. On the one hand, it is of course worried that everyone’s expansion of production may lead to overcapacity, and on the other hand, it is believed that Chinese power semiconductors may rob the market of related Japanese companies.

The window period of the power semiconductor market

According to Omida data, the global and Chinese power semiconductor market space in 2021 will be US$46.2 billion and US$18.2 billion respectively. By 2025, the global and Chinese market space is expected to reach US$54.8 billion and US$19.5 billion respectively, with a compound annual growth rate of 5.92% and 4.55%

At present, the localization rate of the entire power semiconductor market is less than 30%, and most mid-to-high-end products still rely on imports. Domestic manufacturers mainly focus on categories with relatively low technical barriers such as diodes and thyristors, and the localization rate in fields such as high-power MOSFETs and IGBTs is even lower.

Now the world is in a state of imbalance in the supply chain. According to recent data, the delivery cycle and price of overseas mainstream power device manufacturers in the first quarter of 2022 will show an upward trend. Taking high-voltage MOS as an example, the delivery time of Infineon is 52-65 weeks, that of ON Semiconductor is 36-52 weeks, and that of STMicroelectronics is 47-52 weeks.

At the same time, the downstream demand for power devices continues to increase. Judging from the data in the fourth quarter of 2021, the revenue growth rates of major global and domestic power device manufacturers have reached 40% and 38.06%, respectively.

And benefiting from the rapid growth of new energy vehicles, the demand for power devices is rising. Taking IGBT as an example, the delivery date of Infineon is already 39-50 weeks, and that of STMicroelectronics is also 47-52 weeks. And the more out of stock, the more the manufacturer will place an over-order, often resulting in a larger purchase order than the actual need.

However, even if the part of non-real demand orders is removed, it is estimated that the demand for real orders is 1.5 times the actual supply capacity, which means that the gap of IGBT is more than 50%. Even under full production capacity, some manufacturers have decided to suspend receiving orders. For example, ON Semiconductor has notified customers that the production capacity for this year and next two years has been sold out, and there is not enough production capacity. Even if orders are received, they cannot be delivered, so they have stopped accepting orders.

This situation has caused many domestic downstream manufacturers to purchase IGBT products, and they have to look for substitutes in the domestic market, which also gives domestic power semiconductor manufacturers a rare domestic substitution window period.

Still taking the IGBT market as an example, the global IGBT market size will reach US$6.65 billion in 2020, but the market is relatively concentrated. Infineon’s market share exceeds 30%. Among the top ten suppliers, domestic suppliers have a small share , only Silan Micro, Star Semiconductor, and Huawei Electronics have entered the top ten in individual sub-categories, and there is still a large room for domestic substitution in the market.

Will there be a surplus of power semiconductors in China?

China has become an important market for the global power semiconductor industry, and the domestic power semiconductor market is becoming more and more mature. At the same time, as the world’s largest consumer of power semiconductors, China’s market size is growing steadily. From the perspective of application fields, industrial control, automotive electronics and other fields are the fields with the largest demand in the field of power semiconductors in my country.

The rapid growth of the new energy vehicle market will also become the largest and fastest growing application scenario of IGBT in China. According to estimates, the domestic IGBT market for new energy vehicles is expected to reach 23.1 billion yuan by 2025, with a five-year CAGR growth rate of 48%, accounting for 40% of domestic IGBT demand. Moreover, the IGBTs used in new energy vehicles have high requirements on performance and stability, making the gross profit rate reach 35%-40%, becoming the favorite of many power device manufacturers.

At the same time, the demand for high-efficiency devices has also increased significantly due to the transition from traditional fuel vehicles to new energy vehicles. Generally speaking, the greater the power of new energy vehicles and the higher the degree of electrification, the greater the value of single-vehicle power semiconductors. According to data from Infineon, the value of single-vehicle power semiconductors in new energy vehicles can reach US$400, which is about five times that of traditional fuel vehicles.

From the perspective of domestic enterprises, according to statistics from some organizations, as of January 2022, there are about 88 domestic power semiconductor manufacturers. Enough to accommodate these companies.

Among these domestic power manufacturers, Times Electric, Star Semiconductor, BYD Semiconductor, Silan Micro, Macro Micro Technology and other manufacturers have obtained designated projects from car companies. For example, Times Electric has supplied GAC, Dongfeng, Xiaopeng, Ideal and other customers in large quantities; STAR Semiconductor has cooperated with most mainstream domestic automakers, including BYD, GAC, Changan, Chery, BAIC, etc.; BYD Semiconductor not only supplies The parent company also supplies small batches to Dongfeng, Changan and other enterprises; Silan Micro’s main supply customers include Leap, Inovance, SAIC, Geely and other manufacturers.

At present, domestic power device companies can already compete with Infineon’s 4th generation (trench gate) and 7th generation (fine trench gate) products. At the same time, IGBT manufacturers are also speeding up the construction of their own production lines. IDM manufacturers such as Wingtech Technology, Times Electric, Silan Micro and China Resources Micro have layouts on IGBT production lines.

Domestic power IDM manufacturers have begun to deploy 12-inch wafer production lines, and the production capacity is expected to be gradually released in 2022, which will further drive the growth of manufacturers’ revenue and the improvement of product performance. These new production capacities also make Japanese companies more worried about the excess capacity in the market.

However, Zhang Cuixia, the chief investment advisor of Jufeng Investment, once said that the global semiconductor chip production capacity is growing at a rate of about 1% to 3% every year, but the demand for chips is based on technological progress. The industry’s expectations for overcapacity are often forecasts based on current market demand, without taking into account the chip demand for more intelligent industries in the future.

Although the demand in the consumer market decreased in the first half of this year, the demand for automobiles is still increasing, and the impact on consumption is mainly due to the epidemic. With the easing of the epidemic in the second half of the year, consumption is expected to be boosted again, and the demand for power semiconductors will also be greater.

summary


The main market of Japanese power semiconductor companies is concentrated in the niche market, while Chinese companies just focus on the niche market in the early stage of development, which forms direct competition with Japanese companies. But the difference is that Chinese companies also have a broad market space and an excellent window period for domestic substitution, which is more advantageous.

In the past, power devices played a vital role in product performance and durability, so downstream manufacturers lacked the motivation to replace suppliers. Even if the product performance is consistent, domestic manufacturers lack the opportunity to enter the supply chain. Now, from the perspective of supply chain security, more and more customers consider choosing local suppliers. Once the supply of power devices is established, they will not be replaced easily.

Leave a Reply

Your email address will not be published.