2023 State of the Power Semiconductor Market

Market Consolidation

A Lack of Investment?

If anyone is ready to invest it is Infineon. In their 2022 annual report it was announced annual revenue rose from EUR 11 billion to EUR 14.2 bullion from FY2021 to FY2022 (a 29% increase). We have seen Infineon announce billions of investments over the last year alone such as $2 billion into a dedicated WBG manufacturing facility in Malaysia.

Although it isn’t just Infineon making these significant moves. Wolfspeed have recently completed construction of the ‘world’s largest’ 200 mm dedicated SiC fab. They are also building a SiC material facility with total investment to reach $5 billion.

Gallium Nitride (GaN) is a slightly different scenario. One of the selling points of this material is it can be grown as epitaxy on silicon wafers, so no GaN wafers are necessary. Many companies in this sector are currently fabless which provides a certain reliance on foundries but also a relatively low barrier to entry.

Few companies have in-house GaN fabrication capability worldwide with Infineon being one of them. To date Infineon have licensed GaN technology from Panasonic and this collaboration shows no sign of slowing with a 2021 announcement of joint development on 2^nd generation technology.

TSMC is amongst the largest foundry providers for GaN technology globally. TSMC’s 2021 annual report states that 2^nd generation GaN products were due to begin production in 2022 with 3^rd generation technology scheduled to debut in 2025.

Conclusions

A recent article in the Wall Street Journal describes the power semiconductor market as a ‘diamond in the rough’ and ‘a part of the semiconductor business that can take a beating’, reporting Wolfspeed’s revenue surging 54% year over year with onsemi’s SiC revenue tripling since the beginning of the year. It seems certain that power semiconductors will be in high demand for some years to come likely bucking the overall semiconductor market trend.

In terms of level of investment, it comes down to a matter of opinion on what the correct amount should be. Perhaps chronically insufficient is a strong term, no doubt there is a high barrier to entry for dedicated SiC fabrication and the appeal of using legacy equipment makes sense. It does seem some companies are more than willing to take the plunge and make large investments, with the promise of growth in the power semiconductor market over the next decade just too strong. For those with the capital and a brave forward-looking outlook power semiconductors present a wonderful market opportunity.