Emerging Opportunities in the Power Semiconductor Market

Technological advancement is one of the leading forces spurring the rapidly growing EV market. Unlike internal combustion engine vehicles, EVs require various new parts, such as DC/DC converters, onboard chargers, and more—creating new opportunities for the power semiconductor market. Currently, widely adopted silicon (Si) semiconductors have durability and efficiency limitations relative to the high power requirements of EV powertrains. Compound semiconductors—i.e., silicon carbide (SiC) and gallium nitride (GaN)—overcome Si’s weakness by allowing devices to operate at much higher voltages, frequencies, and temperatures than conventional Si. They also have lower switching and conduction losses.

Industry Moves to Seize New Market Opportunities

Semiconductors can be divided into various categories, including power semiconductors and computing semiconductors. Computing semiconductors can be further divided into memory chips—which play a role in memorizing and storing information—and system chips, which process logical information (e.g., data operations and conversion). Current players in the power semiconductor market as well as new computing chip manufacturers are trying to grab this emerging market opportunity for compound semiconductors, as evidenced by the following three market developments:

• In March 2023, Infineon Technologies, a German power semiconductor manufacturer, announced a definitive agreement under which Infineon will acquire GaN Systems, a GaN chip provider, for $830 million.
• In July 2022, onsemi, an American power semiconductor company, agreed to invest $1 billion into building a new research center and manufacturing facility in Gyeonggi, South Korea, to produce power chips by 2025. The chip supplier plans to manufacture SiC power chips for the EV industry.
• In 2020, STMicroelectronics, a Dutch power semiconductor leader serving across the spectrum of electronics applications, and TSMC, the Taiwanese system semiconductor foundry company, announced a collaboration to accelerate the development of GaN process technology.

The shift in the semiconductor market from Si to compounds is not limited to the EV market. As a previous Guidehouse Insights blog explained, the LED lighting industry has started to adopt GaN-based drivers. Compound semiconductors are also an essential technology for the high efficiency of energy storage systems and solar inverters, as well as other applications.

Incumbents in the power semiconductor industry must adapt quickly to this transformation so that they do not regress, as Japanese semiconductor manufacturers did in the past. In 1988, Japan ranked first in global semiconductor market sales, with a 50.3% share of the market, and six Japanese companies were listed in the top 10. In 2021, no Japanese company was among the world’s top 10—replaced by six US, two South Korean, and two Taiwanese companies.

Likewise, new players in the computing chip industry need to move fast in planning strategy, market entry, and technology development to seize this emerging opportunity. For example, many South Korean memory semiconductor manufacturing companies are entering the power semiconductor market. Samsung recently formed a power chip task force and started collaborating with Infineon, and SK acquired a SiC technology company and established a subsidiary. DB HiTek and LX Semicon are also actively pursuing power semiconductor R&D and investment.