Electric Vehicles: Driving the Future of Power Semiconductors

THIS MATERIAL IS A MARKETING COMMUNICATION.

Electric Vehicles: Driving the Future of Power Semiconductors

Power semiconductors are becoming increasingly important, as the rise of electric vehicle (EV) and automation is expected to create strong demand for power semiconductors. In this field, Chinese companies are relatively small but gaining market share, supported by local EV and electronics companies. This article explains the basics of power semiconductors and how Chinese semi companies are positioned to capture the new opportunity.

Power semiconductors, a key component in all electronic devices, are mainly used to change the physical characteristics of the circuit such as voltage and to manipulate the circuit. The rapid development of EV, industrial automation, clean energy and smart grid results in increasing demand for more power semiconductors with better performance. IHS estimated the global power semiconductors to be a US$40bn industry in 2019, around 10% of the overall semiconductor industry. (IHS 2020)

There are two types of power semiconductors, namely power discrete and power integrated circuit (IC), and each accounts for around half of the total market. Under power discrete, the three main products are diode, thyristor and power transistor. Power transistor is the largest segment, accounting for around 75% of the power discrete market. (CICC 2020) The three main designs for power transistors are insulated-gate bipolar transistor (IGBT), metal–oxide–semiconductor field-effect transistor (MOSFET) and bipolar junction transistor (BJT). MOSFET and IGBT are widely adopted in all kinds of electronic devices, with IGBT typically used for higher voltage applications such as industrial and auto.

The power integrated circuit (IC) market was US$18.5bn in 2019 (Yole 2019), with the majority being power management IC. Yole expects the power IC market to reach US$22.7bn by 2023. The majority of the global leaders in power semiconductors are integrated device manufacturer (IDM), as technology migration in power semiconductors is relatively slower and less capital intensive. Texas instruments had the largest market share in power IC at 17% in 2018 (Yole 2019), followed by Qualcomm and Analog Devices. Infineon, which was spun off from Siemens in 1999, dominated the power discrete market with the largest market share in both IGBT and MOSFET.

EV and automation drive demand for power semiconductors

Infineon (2020) estimates semiconductor bill of materials (BOM) of a full EV today to be US$834, compared to around US$350 in an average internal combustion engine car. Power semiconductors are one of the key upgrades in semiconductor under the switch from internal combustion engines to electric motors. For example, Tesla’s three-phase AC asynchronous motor uses 28 IGBTs per phase (total 84 IGBTs), plus another 12 IGBTs for other components. Tesla uses a total of 96 IGBT, with a value of around US$400. (Guoxin 2021) We expect demand for power semiconductors to grow as EV continues to penetrate the overall auto market.

Chinese companies gain market share

The development of the local EV industry will drive local power semiconductor supply chain, similar to how domestic smartphone brands support China’s semiconductor industry. Although domestic power semiconductor players are relatively small compared to global leaders, China has formed a local supply chain in power semiconductor with a combination of fabless, foundry and IDM. In power management IC, Silergy and SG micro are domestic leaders. For diode under power discrete, Wingtech acquired Nexperia which has the largest market share in small signal diodes and transistor globally. In MOSFET, Wingtech also has a strong presence in low-voltage auto products. Hua Hong works with domestic fabless like CR micro to supply MOSFET. In IGBT, Starpower has around 2% (CICC 2020)market share globally, and is gaining market share in industrial and auto applications. CRRC Times operates an IDM model supplying high voltage IGBT for railway and industrial applications.

Electric Vehicles: Driving the Future of Power Semiconductors

Power semiconductors are becoming increasingly important, as the rise of electric vehicle (EV) and automation is expected to create strong demand for power semiconductors. In this field, Chinese companies are relatively small but gaining market share, supported by local EV and electronics companies. This article explains the basics of power semiconductors and how Chinese semi companies are positioned to capture the new opportunity.

Power semiconductors, a key component in all electronic devices, are mainly used to change the physical characteristics of the circuit such as voltage and to manipulate the circuit. The rapid development of EV, industrial automation, clean energy and smart grid results in increasing demand for more power semiconductors with better performance. IHS estimated the global power semiconductors to be a US$40bn industry in 2019, around 10% of the overall semiconductor industry. (IHS 2020)

There are two types of power semiconductors, namely power discrete and power integrated circuit (IC), and each accounts for around half of the total market. Under power discrete, the three main products are diode, thyristor and power transistor. Power transistor is the largest segment, accounting for around 75% of the power discrete market. (CICC 2020) The three main designs for power transistors are insulated-gate bipolar transistor (IGBT), metal–oxide–semiconductor field-effect transistor (MOSFET) and bipolar junction transistor (BJT). MOSFET and IGBT are widely adopted in all kinds of electronic devices, with IGBT typically used for higher voltage applications such as industrial and auto.

The power integrated circuit (IC) market was US$18.5bn in 2019 (Yole 2019), with the majority being power management IC. Yole expects the power IC market to reach US$22.7bn by 2023. The majority of the global leaders in power semiconductors are integrated device manufacturer (IDM), as technology migration in power semiconductors is relatively slower and less capital intensive. Texas instruments had the largest market share in power IC at 17% in 2018 (Yole 2019), followed by Qualcomm and Analog Devices. Infineon, which was spun off from Siemens in 1999, dominated the power discrete market with the largest market share in both IGBT and MOSFET.

EV and automation drive demand for power semiconductors

Infineon (2020) estimates semiconductor bill of materials (BOM) of a full EV today to be US$834, compared to around US$350 in an average internal combustion engine car. Power semiconductors are one of the key upgrades in semiconductor under the switch from internal combustion engines to electric motors. For example, Tesla’s three-phase AC asynchronous motor uses 28 IGBTs per phase (total 84 IGBTs), plus another 12 IGBTs for other components. Tesla uses a total of 96 IGBT, with a value of around US$400. (Guoxin 2021) We expect demand for power semiconductors to grow as EV continues to penetrate the overall auto market.

Chinese companies gain market share

The development of the local EV industry will drive local power semiconductor supply chain, similar to how domestic smartphone brands support China’s semiconductor industry. Although domestic power semiconductor players are relatively small compared to global leaders, China has formed a local supply chain in power semiconductor with a combination of fabless, foundry and IDM. In power management IC, Silergy and SG micro are domestic leaders. For diode under power discrete, Wingtech acquired Nexperia which has the largest market share in small signal diodes and transistor globally. In MOSFET, Wingtech also has a strong presence in low-voltage auto products. Hua Hong works with domestic fabless like CR micro to supply MOSFET. In IGBT, Starpower has around 2% (CICC 2020)market share globally, and is gaining market share in industrial and auto applications. CRRC Times operates an IDM model supplying high voltage IGBT for railway and industrial applications.

AUTHORED BY
Edward Chan
Investment Analyst – Hardware, Semi-conductor

Date: June 10, 2021
Category: Electric Vehicle, Insights

Disclaimer & Information for Investors

No distribution, solicitation or advice: This document is provided for information and illustrative purposes and is intended for your use only.  It is not a solicitation, offer or recommendation to buy or sell any security or other financial instrument. The information contained in this document has been provided as a general market commentary only and does not constitute any form of regulated financial advice, legal, tax or other regulated service.

The views and information discussed or referred in this document are as of the date of publication. Certain of the statements contained in this document are statements of future expectations and other forward-looking statements.  Views, opinions and estimates may change without notice and are based on a number of assumptions which may or may not eventuate or prove to be accurate. Actual results, performance or events may differ materially from those in such statements. In addition, the opinions expressed may differ from those of other Mirae Asset Global Investments’ investment professionals.

Investment involves risk: Past performance is not indicative of future performance. It cannot be guaranteed that the performance of the Fund will generate a return and there may be circumstances where no return is generated or the amount invested is lost. It may not be suitable for persons unfamiliar with the underlying securities or who are unwilling or unable to bear the risk of loss and ownership of such investment. Before making any investment decision, investors should read the Prospectus for details and the risk factors. Investors should ensure they fully understand the risks associated with the Fund and should also consider their own investment objective and risk tolerance level. Investors are advised to seek independent professional advice before making any investment.

Sources: Information and opinions presented in this document have been obtained or derived from sources which in the opinion of Mirae Asset Global Investments (“MAGI”) are reliable, but we make no representation as to their accuracy or completeness. We accept no liability for a loss arising from the use of this document.

Products, services and information may not be available in your jurisdiction and may be offered by affiliates, subsidiaries and/or distributors of MAGI as stipulated by local laws and regulations. Please consult with your professional adviser for further information on the availability of products and services within your jurisdiction. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.

Information for EU investors pursuant to Regulation (EU) 2019/1156: This document is a marketing communication and is intended for Professional Investors only. A Prospectus is available for the Mirae Asset Global Discovery Fund (the “Company”) a société d’investissement à capital variable (SICAV) domiciled in Luxembourg structured as an umbrella with a number of sub-funds. Key Investor Information Documents (“KIIDs”) are available for each share class of each of the sub-funds of the Company.

The Company’s Prospectus and the KIIDs can be obtained from www.am.miraeasset.eu/fund-literature . The Prospectus is available in English, French, German, and Danish, while the KIIDs are available in one of the official languages of each of the EU Member States into which each sub-fund has been notified for marketing under the Directive 2009/65/EC (the “UCITS Directive”). Please refer to the Prospectus and the KIID before making any final investment decisions.

A summary of investor rights is available in English from www.am.miraeasset.eu/investor-rights-summary.

The sub-funds of the Company are currently notified for marketing into a number of EU Member States under the UCITS Directive. FundRock Management Company can terminate such notifications for any share class and/or sub-fund of the Company at any time using the process contained in Article 93a of the UCITS Directive.

Hong Kong: This document is intended for Hong Kong investors. Before making any investment decision to invest in the Fund, Investors should read the Fund’s Prospectus and the information for Hong Kong investors (of applicable) of the Fund for details and the risk factors. The individual and Mirae Asset Global Investments (Hong Kong) Limited may hold the individual securities mentioned. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.

Copyright 2021. All rights reserved. No part of this document may be reproduced in any form, or referred to in any other publication, without express written permission of Mirae Asset Global Investments (Hong Kong) Limited.