Recently, TSMC's counter-trend growth in the third quarter earnings report once again lamented the hot foundry, the status of the foundry has been rising in recent years, and has become a big concern in the industry. However, from the global chip capacity structure, pure foundry capacity accounts for only about 20%, although the foundry "hot", but it must be admitted that the current global chip capacity is still carrying those IDM large factories. Semiconductor Manufacturing International (SMIC) co-chief executive Zhao Navy has pointed out that 80% of the global IC production capacity from the United States, Europe's IDM factories.

In the past, the extremely serious lack of core tide devices, compared to only rely on the foundry, the need to compete for capacity chip design companies, IDM manufacturers and their obvious advantages, stable capacity supply, shorter delivery cycle, stronger design production capacity of adaptability ... Although, in the face of the current bottomless down cycle, IDM manufacturers and foundries also need to Scaling back capital expenditures, but there are exceptions to everything, and power devices is this exception, power IDM giants seem to have chosen a counter-trend expansion path with logic, storage IDM manufacturers.

Rushing to 12-inch 2021

As we all know, the power semiconductor is the core device of energy conversion and control, according to application areas, automotive, industrial and consumer electronics are the top three end markets of power semiconductors. As the power semiconductor design and manufacturing link combination of higher requirements, so take IDM mode is more conducive to design and manufacturing process accumulation, can speed up the launch of new products, so as to obtain a stronger competitive edge, 2021 global power semiconductor top ten list are basically occupied by IDM manufacturers.

2021 can be described as a high light year of power semiconductors, the year in the power device price has become a matter of surprise, like Infineon, ON Semiconductor, STMicroelectronics and other giants are in a year released several price increase letter, to June 2021, most of the original factory shipping prices even up to 30-40%.

Analysis of the reasons are mainly twofold, on the one hand, last year's new energy vehicles, new energy generation, industrial automation, rail transportation and other downstream demand for multi-point explosion, making the power semiconductor market demand increased greatly. On the other hand is the 8-inch foundry capacity shortage, power semiconductors are mainly processed and manufactured on 8-inch wafers, but last year both domestic and foreign power IDM giants seem to be keen to expand 12-inch wafers, for example.

last March, Toshiba announced that it will build a new 300mm wafer fab for the production of MOSFETs and IGBTs; Infineon announced in September last year that its 300mm thin wafer power semiconductor chip factory in Fierach, Austria, officially launched operations; ON Semiconductor began to increase its 300mm wafer fab capacity in East Fishkill in August last year.

In addition, last year, domestic Wintel Technology Ansys Semiconductor announced a new 12-inch wafer fab in Shanghai Lingang with an investment of 12 billion yuan, mainly for power semiconductors; around May, Silan Micro's Silan Tibco launched the first 12-inch chip production line, adding an annual output of 240,000 12-inch high-voltage integrated circuits and power device chip technology upgrading and expansion project; in June of the same year, China Resources Micro and the Grand Fund jointly 7.55 billion investment in new 12-inch wafer production line, after completion is expected to form a monthly output of 30,000 pieces of 12-inch medium and high-end power semiconductor wafer production capacity.

12-inch in full swing, but let 8-inch wafer more "stretched", not to mention a new wafer production line itself will take about 1-2 years, it is difficult to solve the problem of capacity in the short term, more importantly, most of the 12-inch wafer factory is the original 8-inch production line transformation to the power semiconductor supply and demand imbalance Pressure to further increase to July 2021, part of the power semiconductor product delivery cycle has been close to a year and a half, driving the power device industry boom continued upward, even to the first half of this year, the power semiconductor demand is still strong, this can be seen from the major IDM factory's second quarter earnings report.

ON Semiconductor 2Q 2022 revenue increased 25% to $2.085 billion, another record high, automotive, industrial chip combined revenue from 2Q 2021 of $989 million grew 38% to $1.3658 billion; STMicroelectronics 2Q net profit of $3.84 billion, automotive products and discrete component products division (ADG) operating profit surged 251.1%. NXP's revenue increased by 28% to $3.312 billion in 2Q2022, and the automotive division's revenue increased by 36% to $1.713 billion; Infineon's revenue reached €3.618 billion in 3Q2022, up 33% compared to the same period last year, with a gross margin of 43.2%, of which automotive revenue increased to €1.701 billion from €1.491 billion in the previous three months. The gross margin was 43.2%, with automotive revenue increasing to 1.701 billion euros from 1.491 billion euros in the previous three months...

Only from the financial report of the big manufacturers, automotive is indeed the top pillar to support the development of the power semiconductor industry.

In the second half of 2022, SiC is getting stronger and stronger

In fact, in the first half of this year, the consumer electronics market has weakened, but at that time the global shortage of core gap still exists, so there are still a large number of manufacturers choose to expand production, to the second half of the year, the rapid reversal of supply and demand, coupled with a straight line of decline in demand, further impact on the semiconductor market, many large manufacturers have cut back on capital expenditure, but the power IDM giants still choose to strike again.

To power semiconductor leader Infineon, for example, just on October 14, Infineon announced the opening of a new factory in Čegrad, Hungary, for the assembly and testing of high-power semiconductor modules to promote the process of electrification of cars as the key to global carbon emissions reduction. In addition, Infineon has further expanded its investment to increase the production capacity of high-power semiconductor modules for a wide range of applications such as wind turbines, solar modules and energy-efficient motor drives to drive green energy. Infineon Technologies COO Rutger Wijburg said in this regard, the construction of the new plant will further help Infineon to meet the growing demand for electric vehicle applications.

This is not the first time since the second half of this year, Infineon announced the expansion of production, in July this year, it has announced that it will invest $ 1.807 billion in the Malaysian state of Kedah Jubilee construction of wafer fab, is expected to be completed in the third quarter of 2024. At that time, Infineon said that the global active promotion of carbon reduction, electric vehicles, charging and storage infrastructure and renewable energy demand for wide energy gap power semiconductors is growing, ready to provide demand support.

In addition to Infineon, the other two major IDM manufacturers in Europe and the United States have chosen to expand their silicon carbide production. Among them, ON Semiconductor held a ribbon-cutting ceremony on September 21 to inaugurate the expansion of the Roznov silicon carbide plant in the Czech Republic. The expanded Czech plant will increase silicon carbide capacity by 16 times in the next two years, and ON Semiconductor will invest an additional $300 million in the Czech plant by the end of 2023. Likewise, this is not the first plant to be inaugurated in the second half of the year. On August 11, ON Semiconductor announced that a ribbon-cutting ceremony was held to inaugurate a silicon carbide plant in Hudson, New Hampshire, USA. On August 1, ON Semiconductor disclosed that it has signed long-term supply agreements with several customers, who have committed to purchase a total of $4 billion of silicon carbide over the next three years.

On October 5, STMicroelectronics announced that it will build a new SiC substrate plant in Catania, Italy, to meet the growing demand for SiC devices for automotive and industrial applications as they transition to electrification and seek higher efficiency, thereby achieving 40% of ST's own supply of silicon carbide substrates, with the new plant expected to start production in Production is expected to start in 2023.

To say that the power IDM giant expansion, it is inevitable that Japan can not be missing. Japan as a power semiconductor powerhouse, occupying half of the top ten seats in the power semiconductor list.

According to the Nikkei News reported in July, Fuji Electric will be in 2024 fiscal year to the next generation of power semiconductor production capacity to about 10 times in 2020 fiscal year. Fuji Electric expects that the demand for pure electric vehicles and other fields will expand, in order to be ready to supply products to the automotive industry, will establish a mass production system in factories in Japan. It is understood that the material used in Fuji Electric's next-generation power semiconductors is silicon carbide. In addition, its subsidiary Fuji Electric Tsugaru Semiconductor's plant will also introduce a new production line for next-generation power semiconductors, starting mass production in fiscal 2024, and will increase the share of silicon carbide power semiconductors in semiconductor sales to about 10% by fiscal 2025, with the goal of taking a 20% share of the global silicon carbide power semiconductor market in 2025-2026.

According to Japanese media Newswitch reported in September, Hitachi Power Semiconductor, a subsidiary of Hitachi, plans to invest in its Rinkai factory and Yamanashi factory, and will also assist in investing in the factories of outsourced foundry partners, with the goal of expanding power semiconductor production capacity for use in EVs, air conditioners, etc. to about three times the current capacity by 2027. The overall investment (including equipment introduction, depreciation costs and investment in foundry) is estimated to reach one hundred tens of billions of yen, mainly due to the demand from electric vehicles and other uses climbing high, production capacity into the shortage.

But the major giants to expand production is also the bottom of the hand, after all, in this downturn in the environment today, can continue to increase the price of the product can only be a few. Roma and NXP has been exposed to the upcoming price increase, IC Insight is expected to power semiconductors in 2022 the average price will rise 11%, which is the highest rate of increase since the economic recovery in 2010.

From the above manufacturers to expand production news, stimulate them to expand production against the trend of the biggest driving force is still the growing demand for electric vehicle applications. Although the sluggish economy has affected the auto industry to some extent, in the long run, pure electric vehicles will eventually become dominant, and LMC Automotive predicts that by 2034, pure electric vehicles will account for nearly half of sales.

Compared to last year's feverish 12-inch wafer expansion, the second half of this year, silicon carbide has become the main focus of power IDM manufacturers, after all, the new generation of power semiconductors made of silicon carbide can withstand higher voltages than existing silicon products, which can significantly reduce power losses and help extend the range of pure electric vehicles and achieve battery miniaturization.

According to a report by the Japanese market research agency Fuji Economic Survey, the global power semiconductor market is expected to expand to 5 trillion 358.7 billion yen in 2030 due to the expansion of demand for automotive/electronic devices, with the market size of SiC power semiconductors (including SiC-SBD, SiC-FET, and SiC power modules) expected to expand to 969.4 billion yen in 2030, an 11.8 percent increase from 2021. The market size of SiC (including SiC-SBD, SiC-FET, and SiC power module) is expected to expand to 969.4 billion yen by 2030, an 11.8 times increase from 2021. By comparing the two market sizes, the SiC power semiconductor market still has a lot of room for growth, and the future expansion momentum may be even hotter.

Local power IDM makers, not to be outdone

For local semiconductor manufacturers, IDM manufacturers are relatively rare, because the cost of building wafer production lines is too expensive, not ordinary small and medium-sized enterprises can afford, even so, China still has a lot of power IDM manufacturers, which has a great relationship with the nature of the power semiconductor industry itself. Last year, in a number of overseas power semiconductor manufacturers continue to increase prices, and extended delivery under the influence of local power IDM manufacturers began to emerge, ushered in an unprecedented development of new opportunities. In the second half of this year, in the face of the cold winter of the semiconductor industry, their expansion momentum is also no less.

On October 14, Silan Micro disclosed its refinancing proposal, with 6.5 billion yuan of proceeds to be used for the construction of SiC power device production lines and other projects. According to the announcement, the total investment of SiC power device production line project is 1.5 billion yuan, based on Silan MingGa's existing chip production line and supporting facilities, the production capacity of SiC power device chips will be enhanced by purchasing production equipment for the production of SiC MOSFET and SiC SBD chips; after the project reaches production, there will be 120,000 pieces of SiC MOSFET chips and 24,000 pieces of SiC SBD chips per year. SBD chip production capacity of 24,000 pieces/year.

Another power giant Times Electric invested 10 billion yuan to expand its power device project, and at the end of September, Times Electric announced that its holding subsidiary, China Times Semiconductor, intended to invest in industrialization construction projects of low-voltage power devices, with a total investment of about 11.12 billion yuan, and the main investment projects include Yixing sub-project and Zhuzhou sub-project. Among them, Yixing sub-project investment amount of about 5.83 billion yuan, products are mainly used in the field of new energy vehicles; Zhuzhou sub-project investment amount of about 5.29 billion yuan, products are mainly used in new energy power generation and industrial control, home appliance field.

From the latest quarterly financial report of Times Electric, its performance is indeed very pleasing. The first three quarters of this year, Time Electric achieved operating revenue of 10.876 billion yuan, an increase of 27.56%, including emerging equipment products revenue increased by about 1.37 times year-on-year, subdivided, Time Electric power semiconductor devices to achieve operating revenue of 1.292 billion yuan, an increase of 77.82%, can be said to have achieved rapid growth, but also from the side to confirm the booming market of power semiconductors.

In addition to the expansion, many recent IDM power semiconductor projects have also made new progress, such as Changsha BYD semiconductor 8-inch automotive chip production line on September 5 successfully completed the installation, and start production debugging is expected to be officially put into operation in early October; September, Jiejie microelectronic high-end power semiconductor project has been completed in the main body. Jiejie Microelectronics had announced in the first half of this year, will be in the "high-end power semiconductor industrialization construction project" on the basis of infrastructure and support, the construction of a total investment of about 650 million yuan of the second phase of the project, the proposed chip line width of 0.13 micron advanced process.

China is a power semiconductor country, from the market space, China's power semiconductor market growth rate is even higher than the global growth rate. The three-year compound growth rate is 7.53%.

However, the fast-growing market size is less than 20% of IGBT products self-sufficiency rate. At present, the competition of local power enterprises is still mainly concentrated in the field of low-end products, for MOSFET, IGBT and other discrete devices rely on imports to a large extent, but with the domestic manufacturers to layout power devices, Galaxy Securities Research Institute expects that by 2024, the localization rate of IGBT products can reach 40%.

SEMI latest report data also to a certain extent to confirm the development of local power manufacturers of the fierce, SEMI 200mm Fab Outlook to 2025 report shows that from 2021 to 2025, automotive and power semiconductor fab capacity to 58% growth rate, of which China will lead the world in 200mm capacity expansion, to 2025 will grow 66% by 2025. As mentioned above, 200 mm, or 8 inches, is precisely the wafer needed to manufacture power semiconductors, so the expansion of 200 mm wafer capacity will inevitably also play a role in promoting the local power semiconductor industry.

Written in the end

Generally speaking, the dynamics of the industry giants can reflect the trend of the entire industry outlook. From the overseas power IDM giant expansion momentum, we can believe that power devices will continue the high boom, the short-term oversupply chances are low, and according to the local power IDM giant dynamics, we can also believe that the development of China's power device industry at the right time!