SiC and GaN make headlines but silicon fights back

Recently, IHS analysts attended the PCIM 2015 show in Germany. Europe's leading power electronics event brings together semiconductor vendors, other component suppliers and distributors, to promote their latest products for a myriad of end user applications.

The show again increased in size, for the first time occupying three halls of the Nuremberg Messe with more than 500 companies exhibiting. Visitors included anyone with an interest in power electronics, intelligent motion, renewable energy and energy management.

Following are the key highlights of the show from Richard Eden, senior analyst for power semiconductors, IHS Technology.

SiC and GaN semiconductor developers continue to make the headlines

For the past few years, the news headlines have been filled with technology announcements by silicon carbide (SiC) and gallium nitride (GaN) startups, and this year's show was no exception. The wider market has caught on to these stories, as well-established manufacturers are now explaining their development strategies and introducing their own products.

When it comes to new players coming to market, the attitude of existing SiC and GaN companies as a whole is "the more, the merrier." For such companies, the main competitors are silicon suppliers, not each other.

In recent years, SiC and GaN semiconductor companies had to explain the benefits of their devices in practical applications, in order to evangelize about the technology. The message appears to have registered with customers, as design engineers are now proactively asking them for products to help provide power conversion efficiency gains. 

According to IHS, the SiC and GaN power semiconductor market is conservatively estimated to surpass $270 million in 2015.

The silicon empire strikes back

With SiC and GaN power semiconductor developers intent on gaining market share, the dominant silicon suppliers are reacting. Several new devices were on show at PCIM for the first time.

Fairchild Semiconductor introduced its fourth generation of discrete insulated-gate bipolar transistors (IGBTs), which it claims can slash energy loss by 30 percent. Fairchild's new approach should enable new ways to efficiently control large amounts of power.

Infineon Technologies launched a new Intelligent Power Module (IPM): the MIPAQ Pro, integrating into one robust, reliable package IGBTs, gate drivers, the heat sink, sensors, digital control electronics and digital bus communication. It provides an integrated solution for new scalable and compact inverter designs for wind, solar, and industrial motor drive applications.

These two examples illustrate two trends that were increasingly apparent at the show: First, the devices are aimed squarely at improving power efficiency; and second, the increasing integration of power transistors with sensing, control and communication functions in common module packaging.

The growing importance of the automotive sector

The most important application for power semiconductors is the industrial sector. That always has been the case and will likely remain that way for many years; however, according to several discussions at the show the fastest growing application at the moment would appear to be automotive electronics. 

The automotive sector is increasingly important, due to the growing number of semiconductors used in new cars.

There is a need on the legislative front to reduce carbon dioxide emissions, which is being realised by electric motors and pumps that replace hydraulics within power steering and other vehicle systems. Although slower than forecast previously, sales of hybrid and electric vehicles are creeping upward.

In the future advanced driver assistance systems (ADAS) will progress from assisting driver safety, through semi-autonomous driving to fully autonomous driving.

Although premium car brands are early adopters of new high-end electronic comfort and safety features, these features soon trickle down into a larger number of mainstream mid-range cars, which increases shipment volumes.

Merger and acquisition activity increases

The number of semiconductor business mergers and acquisitions has increased recently, and the appetite for mergers and takeovers within the semiconductor industry is expected to continue. For power semiconductors, the biggest story of 2014 was Infineon Technologies' purchase of International Rectifier (IR). The deal completed in January 2015, so the PCIM show was the first time in Europe that the combined power portfolio of Infineon and International Rectifier were presented as one company.

Although neither company exhibited at PCIM, there was a lot of discussion surrounding the recent $40 billion merger of NXP and Freescale. NXP already supplies discrete power semiconductors to the automotive sector, so combining this strength with Freescale's significant presence in automotive microcontrollers should increase the merged company's penetration in that market.

Final conclusions from PCIM

Until 2008 the power semiconductor market grew at roughly 8 percent each year; but that is no longer the case, since the global financial crisis. The overall long-term market growth projections for the next five years has slowed to around 5 percent per year, according to IHS. The key factors causing this reduced optimism are general global macroeconomic conditions, the weaker Chinese economy, concerns about the Euro-zone countries' prospects and the Euro-to-US dollar exchange rate.

Power semiconductor companies can look forward to an environment of continued merger-and-acquisition activity, customers' demanding improved energy efficiency, and exciting and new technologies and products. However as long as the need exists to convert electric power into useful work with increasing efficiency, the power semiconductor market will continue to grow.