At the 3rd China Semiconductor Investment Alliance Annual Conference held in December last year, JW insights released the "Top 100 Chinese Semiconductor Enterprises" list (hereinafter referred to as the "Top 100 List"). ZCX The list is aimed at domestic semiconductor design and IDM companies, ranking by operating income, and the entry threshold needs to reach an annual operating income of more than 300 million yuan. Among them, the revenue of TOP10 enterprises reached the level of 7 billion yuan, entering the threshold of "$1 billion revenue", marking that it has a stable market and sustainable development capabilities; the revenue threshold of TOP 50 has exceeded 1.2 billion yuan, based on the valuation of semiconductor companies in China's capital market, which basically corresponds to the market value threshold of 10 billion.
Huawei HiSilicon, Weier Semiconductor, Zhixin Micro, Wingtech Technology, Tsinghua Unigroup, ZTE Micro, Yangtze River Storage, Gigabit Innovation, China Resources Micro and Silan Micro ranked in the top 10 of the list. It is worth noting that among the top 100 companies on the list, power semiconductor manufacturers occupy 13 seats, of which Wingtech Technology, China Resources Micro, and Silan Micro 3 entered the TOP 10.
JW Insights believes that the era of new energy vehicles has spawned a great development of the power semiconductor market, and domestic power semiconductor manufacturers will also benefit from this. In the past year, the lack of core in automobiles has become the focus of the industry, and under the general trend of electrification of automobiles, the demand for power semiconductors at the application end will continue to rise, and production capacity will become the most difficult problem. In this context, power semiconductor manufacturers around the world are stepping up to expand production capacity, improve supply chain resilience, and seize the most potential growth curve of the power semiconductor market under the speed of automotive electrification.
Electric vehicles and autonomous driving are driving demand for power semiconductors up
In the context of the speed of vehicle electrification and the accelerated global shift to decarbonization, power semiconductors have become key devices. Electric vehicles will no longer require gasoline engines, fuel tanks or transmissions, and instead will have core components such as electric motors, batteries, power control units (PCUs), and other core electrical components, all of which play a vital role in power semiconductors. For example, converters required for high-torque electric vehicles to power electric motors, DC/DC converters that reduce battery voltage, and additional similar components for battery chargers are all inseparable from power semiconductors that enable power conversion and control.
The International Energy Agency (IEA) predicts that the number of eco-friendly vehicles such as pure electric vehicles (EVs) will expand at a rate of 30% per year, reaching 145 million units worldwide by 2030. In the process, the demand for power semiconductors will also surge. According to the research company Astamuse, the global market size of power semiconductors was $32 billion in 2018 and will increase to $55.6 billion by 2030.
Power semiconductors are used in a wide range of applications, with automotive, industrial and consumer electronics being the top three end markets. Benefiting from the strong downstream demand for new energy vehicles, 5G base stations, inverter home appliances, etc., the superposition of "new infrastructure", the third generation of semiconductors and other policies to fully boost, fast charging charging heads, photovoltaic / wind power installed capacity, UHV, intercity high-speed rail transportation demand for power devices is also rapidly expanding, power devices ushered in a boom cycle. Yole data shows that the global power semiconductor q device market size in 2019 was $17.5 billion. Yole forecasts that the global power device market may reach $22.5 billion by 2025, and the CAGR will be 4.28% in 2019-2025.
From the perspective of product type, the current power device market is still dominated by discrete devices, but the share of power modules will increase significantly in the next few years. A yole report notes that electric vehicles, industrial motors, and home appliances will drive the power module market to nearly $10 billion by 2026.
From the perspective of the industrial chain, for a long time, benefiting from the development of the automobile industry and industrial manufacturing, Europe and Japan are the two strongest in the power semiconductor industry. In the field of automotive power semiconductors, Infineon, ST, Texas Instruments (TI), ON Semi, Rohm and other Major European and American manufacturers have long occupied major market shares.
Among them, Infineon's market share in this field is about 30%. Japan's Mitsubishi Electric, Fuji Electric and Toshiba together account for about one-fifth of the global power semiconductor market share.
When the expansion is in progress
However, competition in the field of power semiconductors is also becoming increasingly fierce. In the past year, due to external factors such as the epidemic, the demand for emerging applications such as 5G and AI, wafer foundries have been in short supply, and the entire semiconductor market has shown a shortage of goods due to rising prices and short supply.
In order to occupy more markets as soon as possible, global power semiconductor manufacturers have joined the ranks of expansion. For example, in order to alleviate the shortage of chip supply, Infineon announced the expansion of production in September 2021, a new 300 mm (12-inch) fab in Villachs, Austria, and in the first phase of the expansion, the chips will be mainly used to meet the needs of the automotive industry, data centers and renewable energy generation sectors such as solar and wind energy. It is reported that the plant has a total investment of 1.6 billion euros, which is one of the largest projects of its kind in the field of microelectronics in Europe, and the power semiconductors produced annually after full operation will be able to meet the needs of the drivetrain of 25 million electric vehicles. In addition, Infineon is expanding its line of IGBT modules and power semiconductors in Wuxi, Jiangsu Province, China.
Japanese companies are also increasing their investment. Toshiba will invest about 100 billion yen (approximately US$868 million) to build a new plant at its semiconductor plant in Ishikawa Prefecture by FY2024, mainly producing power semiconductors, and will increase its overall production capacity by about 2.5 times. Mitsubishi Electric plans to invest JPY 130 billion (APPROXIMATELY USD 1.129 billion) in equipment for power semiconductors in the five years ending in fiscal year 2025 (ending in March 2026). Fuji Electric will also invest approximately JPY 190 billion (USD 1.65 billion) over the five years ending in fiscal 2023, an increase of 60% over the initial plan.
Infineon, NXP, STMicroelectronics, Texas Instruments, Renesas Electronics and other leading manufacturers have all emphasized in recent earnings reports/conference calls that demand for automotive chips is strong, and that the order volume on each hand is almost in a state of "far exceeding supply". JW Insights believes that under the current explosive growth trend of demand side, overseas large enterprises have not fully met the requirements of automobile manufacturers, which is a good opportunity for domestic power semiconductor manufacturers to catch up. In the past year, the performance of many domestic power semiconductor manufacturers has also been quite eye-catching, and among the 13 power semiconductor manufacturers in the "Top 100 List", many IDMs have also announced expansion plans.
Chinese power semiconductor manufacturers take advantage of the wind to rise IDM or more advantages
Domestic power semiconductor manufacturers will benefit from the era of new energy vehicles.
In the past year, the supply of imported components has been insufficient due to the tight upstream wafer foundry capacity in the semiconductor industry, the continuous shortage of overseas epidemics, and the strong demand in various downstream industries (especially automobile/photovoltaic inverters, etc.), and the process of domestic substitution has been further accelerated. According to Omdia data, the size of China's power semiconductor market is expected to reach $19 billion in 2024. The development and growth rate of China's new energy vehicle market in recent years has tended to be more globally leading, and the compound annual growth rate of China's new energy vehicle market will reach 31.6% from 2021 to 2025.
In the past 2021, the performance of many listed companies in the domestic power semiconductor sector has been eye-catching, and factors such as product price increases, demand growth, and production capacity release have become important drivers. JW Insights believes that in 2022, the demand in the new energy field will continue to inject vitality into the power semiconductor market. Among the 13 power semiconductor companies in the "Top 100 List", 11 listed companies (BYD Semiconductor, Ruineng Semiconductor are not listed), as of press time, in addition to Wingtech Technology and Dongwei Semiconductor, 9 have released 2021 performance forecasts, all of which are pre-increased, and the profit growth rate is between 40.49% and 21265%, with an overall performance eye-catching.
Silan Micro expects that the net profit attributable to shareholders of listed companies in 2021 will increase by 1.45 billion yuan to 1.46 billion yuan compared with the same period last year, an increase of 2145% to 2165% year-on-year. Among them, the company's holding subsidiary, Silan Jixin's 8-inch line, basically maintains full production, and continuously optimizes the product structure to achieve annual profitability; the company's holding subsidiary, Silan Mingxin LED chip production line, achieves full production and high yield, and achieves annual profitability. New Clean Energy expects to achieve a net profit attributable to the mother of 408 million to 413 million yuan in 2021, an increase of 192.78% to 196.37% year-on-year. Among them, the company's shielded gate power MOSFET, IGBT and other products sales scale and proportion increased rapidly, successfully developed photovoltaic energy storage, new energy vehicles and other emerging markets and key customers and achieved a large number of sales.
In the past year, domestic manufacturers are also stepping up the layout of production capacity expansion, "lack of core", "price increase" keywords, domestic manufacturers also get more import substitution opportunities, which is particularly rare in the field of vehicles.
On February 27, 2021, Wingtech Technology disclosed on the company's official website that Nexperia's 12-inch fab in Lingang, Shanghai, has broken ground in January this year and will be put into operation in July 2022, with a production capacity expected to reach 400,000 pieces per year, mainly producing power semiconductors.
On June 7, 2021, China Resources Micro issued an announcement that it plans to sign an investment agreement with the Second Phase of the National Fund and Chongqing Xiyong to initiate the establishment of Runxi Microelectronics (Chongqing) Co., Ltd., the registered capital of the company is proposed to be 5 billion yuan, of which China Resources Micro intends to contribute 950 million yuan with its own funds, accounting for 19% of the registered capital of the project company after the completion of the capital contribution. The announcement emphasizes that after the completion of Runxi Microelectronics, it is expected to form a monthly output of 30,000 pieces of 12-inch high-end power semiconductor wafer production capacity, and supporting the construction of 12-inch epitaxial and flake process capabilities.
On July 30, 2021, Jiejie Microelectronics said on the investor interactive platform that the company's 2.5 billion high-end power semiconductor project in Nantong is in the process of infrastructure construction, and the construction period is two years.
JW Insights noted that based on the long-term trend of semiconductor capacity shortage and supply chain security, some designers (Fabless) have tried to build their own fabs. Star Semiconductor is also one of them.
On September 23, 2021, Star Semiconductor issued an announcement that the company's fixed increase was approved by the CSRC. According to the additional issuance plan, Star Semiconductor will raise a total of no more than 3.5 billion yuan to invest in high-voltage special process power chips, SiC chips and power semiconductor module production line automation transformation projects, and is expected to build a 6-inch wafer production line with an annual output of 360,000 pieces (including a 6-inch production line with an annual production capacity of 300,000 high-voltage power chips and a 6-inch SiC chip production line with an annual output of 60,000 pieces).
Looking at the global power semiconductor industry pattern, foreign manufacturers are mainly giants dominated by IDM to form a high monopoly. At present, the domestic power semiconductor industry is still relatively scattered, and the local IDM power semiconductor manufacturers with all-round comprehensive competitive strength in chip research and development, design and manufacturing are still only a minority. Such a decentralized situation will have some inherent discomfort in the field of power semiconductors, because the industry chain collaboration is very important for semiconductor power device research and development and design enterprises.
JW Insights believes that based on the current situation of the domestic industrial pattern, if the local power semiconductor industry adopts the parallel business model of IDM and Fabless, it will get more product substitution opportunities under the background of the impact of the epidemic on the overseas production capacity of international manufacturers and the trend of domestic substitution. In fact, part of the reason for the vacancy of domestic high-end power devices and vehicle-grade products is related to the industrial chain. Because power semiconductors have their own industrial characteristics, they need to be closely integrated with downstream applications, unlike digital chips that can completely take the horizontal division of labor model. (Proofreading/Nagging)