Highlights from PCIM Europe: power semiconductor market slowing, says IHS Markit

After this year’s PCIM Europe 2019 (Power Conversion and Intelligent Motion) show in Nuremberg, Germany (7-9 May) was attended by a record 12,000+ visitors, including more than half (54%) coming from outside Germany, Richard Eden — IHS Markit’s principal market analyst for Power Semiconductors — has issued a research note making the following observations.

Many discrete power semiconductor suppliers reported double-digit growth for the third consecutive year in 2018, but the market began to slow in third-quarter 2018 and declines continued through fourth-quarter 2018 and first-quarter 2019. Clearly, 2019 will not bring the industry growth seen during the previous three years, but is this a temporary market readjustment or the start of a longer decline? The consensus is that 2019 will be disappointingly flat, with only about +/-2% growth from 2018. However, suppliers are optimistic that growth will return in 2020.
Shortages of commodity products (such as MOSFETs, discrete IGBTs and rectifiers), which started early in 2017, ended in late 2018. The shortages had caused some end-customers to over-order or double-order components in 2018, but by first-quarter 2019 it became clear that there was little or no real demand for those parts from most sectors. End-customers started to push out deliveries in the winter of 2018-2019. The distribution supply chain is trying hard to absorb these adjustments, says Eden.
In last year’s PCIM research note, IHS Markit correctly anticipated slower demand for power semiconductors in 2019. This is helping to alleviate the shortages of discrete power semiconductors, commodity mixed-signal ICs and silicon wafers, the firm adds.

Sectors sending out mixed signals

Application sectors are sending out diverging signals on the prospects for 2019. For example, the industrial market is slowing for items such as motor drives, but heavy-duty industrial fans and blowers are experiencing higher growth. In automotive, vehicle production is slowing, but the hybrid and electric vehicle (HEV/EV) sector is doing better. The latter sector is very important to silicon carbide (SiC) power module companies, which are seeing new powertrain inverter projects starting now, for mass production in about three years.
The consumer electronics sector is doing quite well globally, but is struggling in China. The wind energy market is declining somewhat, especially in Europe, but the solar energy industry is growing again after a bad year in China in 2018.
The shortages of discrete power semiconductors were also affecting the independent power module assembly companies. The module assembly companies rely on semiconductors from third-party suppliers, but lead-times and production allocation now have returned to normal.

Looming US-China trade war

The trade war between the USA and China has started to intensify recently as the two governments have imposed an increasing number of tariffs on imported goods. For the time being, the semiconductor industry has been relatively unaffected by direct action, but there is rising uncertainty that’s threatening or delaying investment in the sector. Several semiconductor IDMs are questioning whether to invest in fabrication plants in China or move them to Vietnam, Thailand or other low-cost Asian economies, to avoid any future US tariffs on goods imported from China. Future planning concerns are holding the semiconductor market back now, especially for the consumer electronics sector.
Whether the trade war is to blame or not, customers mentioned that China’s regional semiconductor market is faring worse than Europe, the Middle-East & Africa (EMEA) and the Americas. This was noted by both local Chinese manufacturers and western companies exporting into China.

SiC power gears up for growth

There is a fear that suppliers of silicon carbide power semiconductors will not be able to obtain sufficient quantities of SiC substrate wafers to allow the production of enough chips to keep pace with the rapidly increasing demand in the future.
However, supply concerns were alleviated by Cree, which announced that it will invest $1bn in the expansion of its SiC wafer production capacity with the development of a new fabrication facility and a materials mega factory at its headquarters in Durham, NC. This marks the firm’s largest investment to date in its Wolfspeed SiC power and GaN-on-SiC RF business.
The Cree announcement follows on from PCIM 2018, when ROHM Semiconductor announced that it was building a new SiC device fab, ROHM Apollo Fukuoka (to increase ROHM’s SiC device production capacity by 16-fold).
Chinese company CRRC Times Electric is opening a 150mm SiC production fab in Zhuzhou. It is conducting batch qualification testing now, with a plan to launch its first SiC devices during 2019. It is also setting up the Times Electric Innovation Centre (TEIC) in Birmingham, UK, close to its automotive and traction customers and where well-trained engineers can be recruited.

GaN power developments continue

The number of GaN power semiconductor products on show at PCIM also increased. Efficient Power Conversion Corp (EPC) joined other leading GaN power semiconductor suppliers, such as Exagan, GaN Systems, Infineon Technologies, Panasonic, Transphorm, VisIC Technologies, and, for the first time, Alpha & Omega Semiconductor, Tagore Technology and Vishay Intertechnology.
In a move with similar motivations to those of Times Electric Innovation Centre, Exagan has opened a Power Solutions Center in the CEA building in Toulouse in order to extend its applications support.
Vishay Intertechnology showed its first 100V GaN power device, which is being sampled to selected customers now. Production is scheduled for late 2019.

Tags: Power electronics

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