In recent years, the tech industry has pivoted around two keywords, low carbonization and digitization, marking significant areas of growth. Semiconductor companies are eagerly investing and acquiring ventures, particularly in response to the emerging new energy industry chain driven by the low-carbon trend.

At the recent Infineon OktoberTech™ event, David Poon, Senior Vice President and President of Greater China Region at Infineon, outlined the company’s ambitious goals. By the end of 2030, Infineon aims to secure a 30% market share in the SiC market, targeting an annual revenue exceeding USD 7.6 billion. As per a report from 21jingji, Infineon also holds a positive outlook on the overall market growth of third-generation semiconductors.

The current landscape sees widespread application of third-generation semiconductors like SiC and GaN in new energy vehicles, charging stations, energy storage, and other products. Major industry players are actively entering this dynamic market. As a dominant force in power semiconductors, Infineon not only announced SiC expansion plans earlier this year but also acquired GaN Systems in October.

Speaking of recent GaN acquisition, Poon expressed during an interview that the collaboration between the two companies would significantly propel Infineon’s development. They believe that GaN has reached a turning point, extending its applications beyond chargers to encompass diverse fields like energy storage, heralding a phase of substantial growth. A new round of competition is unfolding within the realms of the new energy field and the industrial ecosystem.

New Energy and Digitization as Growth Drivers

In terms of performance, Infineon achieved remarkable double-digit growth in the past year. According to the full-year financial report for the 2023 fiscal year (ending September 30, 2023), the company’s revenue reached USD 17.868 billion marking a 15% YoY increase, while profits surged by 30% to USD 4.819 billion.

Jochen Hanebeck, CEO of Infineon, acknowledged the company’s record-breaking revenue and profits in the 2023 fiscal year, despite acknowledging the persisting challenges in the operating environment.

On one hand, there’s a persistent structural growth momentum in renewable energy, electric vehicles (particularly in China), and the micro controller sector within the automotive industry. On the other hand, demand for applications in consumer goods, communications, computing, and the IoT is currently experiencing a temporary lull. Infineon anticipates continued revenue growth in the 2024 fiscal year, although the pace of growth is expected to moderate. The company is actively responding to market conditions, seizing opportunities for structural growth.

The new energy and digitization markets emerge as the new growth engines targeted by leading semiconductor companies like Infineon. With China at the forefront of the industry’s new landscape, Infineon is keen on tapping into new opportunities in the Chinese market.

In an interview, Poon remarked, “Looking at low carbonization, firstly, the growth in new energy vehicles is substantial. According to data from the China Association of Automobile Manufacturers (CAAM), from January to September 2023, the production and sales of new energy vehicles reached 6.313 million and 6.278 million units, respectively, with YoY increases of 33.7% and 37.5%. The semiconductor value in an electric vehicle has increased by about USD 950 compared to a traditional fuel vehicle, making this a significant driving force.”

He further emphasized, “The amounts of domestic new energy vehicle shipments and exports are robust. Additionally, the proliferation of charging stations in the country indicates clear prospects for this market. In other areas of new energy, such as photovoltaics, wind power, and energy storage, these are also growth drivers we are closely monitoring.”

New energy vehicles and renewable energy have evolved into the foundational pillars of the burgeoning low-carbon mega-industry. Simultaneously, within the digitization market, Infineon offers solutions related to data centers. “Apart from data centers, in domains like smart factories, smart cities, and smart homes, we provide digitization and low-carbon solutions to enhance efficiency. Digitization serves as a significant driving force,” highlighted Poon.

SiC and GaN Operating in Tandem

In the current landscape of the new energy market, third-generation semiconductors such as SiC and GaN have gained significant traction. Taking the more mature development of SiC as an example, although it is still undergoing iterative development, it has found extensive applications in the automotive field, experiencing rapid growth.

TrendForce predicts that the SiC power component market in the automotive sector will witness substantial growth, from USD 1.09 billion in 2022 to USD 3.98 billion in 2026, with a compound annual growth rate of 38%.

Presently, SiC faces supply shortages, prompting major makers to scale up production. Infineon, for instance, has announced a substantial expansion of its Kulim wafer fab in Malaysia, aiming to establish the world’s largest 8-inch SiC power wafer fab. Poon noted that the first phase is slated to commence production in mid-next year, with the second phase scheduled for production in 2027. This expansion is driven by the broad market demand for SiC across applications like AI, automotive, and new energy photovoltaics.

As per TrendForce, the collective market size of SiC power components in 2023 reached USD 2.28 billion, witnessing a notable 41.4% YoY growth. Projections suggest that by 2026, the SiC power component market could reach an impressive USD 5.33 billion, with the automotive sector’s SiC power component market poised to surge to USD 3.94 billion.

Besides Infineon, major players like Wolfspeed and STMicroelectronics are actively bolstering their production capacities. In June this year, STMicroelectronics announced plans to establish an 8-inch SiC device manufacturing joint venture with Sanan Optoelectronic in China. The commencement of production is anticipated in the fourth quarter of 2025, with full completion scheduled for 2028, involving a total construction cost of approximately USD 3.2 billion. Wolfspeed, in collaboration with the German automotive giant ZF Group, not only established a joint innovation laboratory for SiC but is also in the process of constructing a SiC device factory in Germany.

According to TrendForce, The GaN market is primarily propelled by consumer electronics, with a core emphasis on fast charging. Other consumer applications include audio, wireless charging, power, and consumer products. However, many companies have already shifted their focus to industrial markets such as data centers, renewable energy, and the new energy vehicle market, with numerous companies persistently conducting R&D in this direction.”

Overall, semiconductor giants are strategically navigating both SiC and GaN, intensifying efforts in the realm of third-generation semiconductors and fortifying a more comprehensive industrial chain.
(Image: Infineon)

What started as a groundbreaking acquisition in the SiC/GaN third-generation semiconductor and power semiconductor sector came to a satisfying conclusion on October 24th.

In March 2023, the leading power semiconductor manufacturer, Infineon, announced its plan to acquire GaN Systems, a top Canadian producer of GaN chips, for $830 million. After over half a year of negotiations and regulatory approvals, the transaction officially closed on October 24, 2023. With this, GaN Systems is now officially part of Infineon, and the synergistic effect of this powerhouse alliance is set to make a significant impact.

Currently, Infineon boasts a workforce of 450 GaN technology experts and holds more than 350 GaN technology patents. GaN Systems, on the other hand, ranks among the world’s top five GaN power device manufacturers. According to TrendForce’s “2023 GaN Power Device Market Analysis Report-Part 1,” GaN Systems held a 12% market share based on revenue in 2022, securing the fifth spot globally. In addition, GaN Systems made early inroads into the high-growth automotive power semiconductor market and secured orders from renowned automaker BMW.

From a technological, application, customer base, and market influence perspective, it’s evident that the acquisition of GaN Systems complements Infineon’s position in compound semiconductor and power semiconductor market. This collaboration creates synergies that significantly benefit Infineon.

As Infineon stated, this move further expands their leadership in the power semiconductor sector and substantially reduces the time to market for new products. Both companies complement each other in terms of intellectual property, a deep understanding of applications, and well-established customer project planning, providing a highly favorable environment for Infineon to meet the demands of various rapidly growing applications.

The landscape of the GaN power semiconductor market may undergo significant changes

In the future, the competition landscape within the entire compound semiconductor market, especially in the GaN power semiconductor sector, is likely to undergo significant changes, marking the onset of an integration phase in industry chain competition.

As for the GaN power component market, up until 2023, Infineon had not secured a position among the world’s top manufacturers. However, following the merger, Infineon is poised to join the top ranks. Based on 2022 data, TrendForce’s estimate indicate that the combined market share of both companies could reach 15%, on par with EPC’s 2022 market share of 15%, and there is a potential for surpassing it in the future.

For the compound semiconductor market, it’s worth noting that, in addition to acquiring GaN Systems this year, Infineon has been making further inroads into the GaN field. In simple terms, its involvement in the GaN power semiconductor market is continuously strengthening.

In May of this year, Infineon announced its participation in a collaborative European research project named “ALL2GaN,” joined by 45 partner organizations, with a project budget of €60 million. The project is focused on developing integrated GaN power designs from chips to modules, primarily catering to applications in telecommunications, data centers, and server facilities. Infineon leads the ALL2GaN project, with other participants including imec, a Belgian microelectronics research center, Nexperia, Ericsson, and other enterprises.

Through accumulating expertise from this project, Infineon’s influence in the European GaN power semiconductor field is expected to further enhance. In the Asian market, Infineon operates a factory in Malaysia, with a current focus on SiC (Silicon Carbide). GaN Systems has established offices in Shenzhen and Taiwan, demonstrating an increased commitment to the Asia-Pacific region.

GaN Systems has also reinforced its presence in the European and American markets. Firstly, its Canadian headquarters in Ottawa has undergone a threefold expansion. Secondly, GaN Systems has inaugurated a new design center in Dallas, Texas, gradually expanding its business scope in North America and Europe, while comprehensively advancing its global expansion plan.

Considering these developments, Infineon is poised to conduct its global operations more effectively, gaining a more influential role in the GaN power semiconductor market. This is expected to lead to a gradual increase in business scale and market share.

Furthermore, the collaboration between these two industry giants is set to catalyze the industrialization of GaN, particularly in high-power applications such as automotive and data centers. According to TrendForce’s estimates, the global GaN power component market is projected to grow from $180 million in 2022 to $1.33 billion by 2026, with a remarkable compound annual growth rate of 65%. With proactive efforts from industry leaders like Infineon and GaN Systems, power applications are poised to become the primary growth engine in the GaN domain, accelerating the overall expansion of the GaN market size.

Infineon, Hyundai, and Kia announced on October 18 that they have signed a multi-year agreement for the supply of SiC (Silicon Carbide) and Si (Silicon) power semiconductor modules and chips.

Under this agreement, Infineon will supply SiC and Si power components to Hyundai and Kia until 2030, and in return, Hyundai and Kia will support Infineon’s production capacity and reserves.

The demand for SiC power devices has surged with the growing popularity of new energy vehicles, and as a prominent industry leader, Infineon has embarked on numerous collaborations this year.

• Infineon and Resonac

In January, Infineon declared a new multi-year supply and cooperation agreement with Resonac Co., Ltd. (formerly Showa Denko K.K.). According to this agreement, Resonac will provide Infineon with SiC materials for producing SiC semiconductor components, including 6-inch and 8-inch wafers. Initially focused on 6-inch wafers, Resonac will later supply 8-inch SiC wafers to support Infineon’s transition to 8-inch wafers. As part of the agreement, Infineon will also provide Resonac with SiC material technology-related intellectual property.

• Infineon and TanKeBlue, SICC

In May, Infineon signed long-term agreements with TanKeBlue and SICC to ensure a more competitive and substantial supply of silicon carbide materials. These two suppliers will primarily provide Infineon with 6-inch silicon carbide substrates and offer 8-inch silicon carbide materials, aiding Infineon in transitioning to 8-inch SiC wafers. The agreements also encompass silicon carbide ingots, as Infineon had previously invested nearly 1 billion RMB in acquiring a laser-based wafer technology enterprise, aiming to enhance the utilization of silicon carbide substrates and device cost competitiveness.

Notably, both TanKeBlue and SICC will account for a double-digit percentage of Infineon’s long-term demand volume.

• Infineon and Foxconn

In the same month, according to the Foxconn’s official website, Infineon and Foxconn have signed a memorandum of cooperation to establish a long-term partnership in the field of electric vehicles. Under this agreement, the two companies will focus on the adoption of silicon carbide technology in high-power applications for electric vehicles, such as traction inverters, on-board chargers, and DC converters. They also plan to jointly establish a system application center in Taiwan to expand their collaboration further.

• Infineon and Schweizer Electronic

Additionally, Infineon is collaborating with Schweizer Electronic to develop an innovative solution aimed at directly embedding Infineon’s 1200V CoolSiC™ chips into PCB boards. This move seeks to significantly enhance the driving range of electric vehicles while reducing the overall system cost.

• Infineon and Infypower

In September, Infineon announced a partnership with Shenzhen Infypower (INFY) to provide the industry-leading 1200V CoolSiC™ MOSFET power semiconductor devices, boosting the efficiency of electric vehicle charging stations.

In line with their goal of capturing a 30% share of the global SiC market by 2030, Infineon revealed plans to invest up to 5 billion euros over the next five years to construct the world’s largest 8-inch SiC power semiconductor facility in Malaysia.

(Photo credit: Infineon)

In recent developments, an industry source revealed that Coherent, a leading chip material supplier in the U.S. automotive industry, has piqued the interest of four major Japanese corporate groups with regards to its silicon carbide (SiC) business, with a transaction amount potentially reaching $5 billion.

The four Japanese companies involved are DENSO, Hitachi, Mitsubishi Electric, and Sumitomo Electric, and discussions have been underway regarding the acquisition of minority stakes in Coherent’s SiC business.

Coherent had previously stated its intention to invest $1 billion over the next decade to expand the production of SiC wafers. Compared to traditional silicon chips, SiC wafers contribute to improved electric vehicle range. If this investment materializes, it would significantly ease the financial burden on the company. However, no concrete agreements have been reached at this stage.

Data indicates that Coherent is one of the few companies globally with complete and vertically integrated SiC manufacturing capabilities. It can produce SiC wafers and epitaxy materials, extending all the way to power devices. Furthermore, Coherent’s SiC materials are known for their exceptional quality, making it nearly the only supplier capable of transitioning from the current standard wafer diameter of 150 millimeters to 200 millimeters successfully. The production of larger diameter wafers can substantially reduce device costs. Additionally, Coherent’s SiC power devices demonstrate excellent heat resistance and conductivity.

Competition and Collaboration in the Japanese SiC Industry

According to TrendForce’s latest analysis, as collaborations between companies like Infineon and ON Semiconductor with automotive and energy sector stakeholders become more apparent, the overall SiC power device market is projected to reach $2.28 billion in 2023, growing at an annual rate of 41.4%.

Meanwhile, buoyed by robust demand in downstream application markets, TrendForce anticipates that the SiC power device market could reach $5.33 billion by 2026, with its primary applications continuing to center around electric vehicles and renewable energy.

In recent years, the new energy vehicle industry has been thriving, and Si power devices have gradually fallen short of meeting the demands of new energy vehicles. SiC, as its alternative, has shown remarkable performance in applications, making it highly sought after in the market. The SiC power device market still has considerable room for growth, prompting both automotive and SiC companies to invest in SiC power device production or enhancements.

Japan, being a leader in semiconductor power device manufacturing and production, has numerous companies actively expanding to broaden their market reach.

On October 4th last year, Nikkan reported that Hitachi Power Semiconductor Device would invest several billion yen, aiming to triple its SiC power semiconductor production capacity by fiscal year 2026.

On July 12th this year, ROHM announced its acquisition of the former Solar Frontier factory in Kunitomi, Miyazaki, to expand its SiC power semiconductor production capacity. The acquisition is set to conclude in October 2023 and is planned to become the company’s main factory, primarily producing SiC power semiconductors. It is expected to increase its silicon carbide capacity to 35 times that of the fiscal year 2021 by 2030.

With these competitive and cooperative scenarios unfolding, it’s evident that neither automotive nor SiC companies are holding back in their pursuit of SiC power device production or improvements.

In July this year, Renesas Electronics signed a 10-year agreement and paid $2 billion in advance to Wolfspeed for the supply of 150mm bare and epitaxial SiC wafers. Renesas Electronics also reached an agreement with Mitsubishi Electric, with Mitsubishi investing 260 billion yen in technology and expansion, including the construction of a new SiC factory in Japan.

As a technological leader in producing SiC substrates, epitaxy, and power devices, Coherent is not to be overlooked by these major corporations.

On May 26th this year, Coherent and Mitsubishi Electric announced that they had signed a MOU and reached a project collaboration agreement to jointly scale up the mass production of SiC power electronic products on a 200mm technology platform.

Mitsubishi Electric announced that it would invest approximately 260 billion yen over a five-year period ending in March 2026, with approximately 100 billion yen dedicated to constructing a new SiC power device factory based on a 200mm technology platform and strengthening related production facilities. According to the MOU, Coherent will develop 200mm n-type 4H SiC substrates for Mitsubishi Electric’s future SiC power devices to be produced at the new factory.

In the future, Mitsubishi Electric aims to produce large quantities of silicon carbide chips using Coherent’s 200mm wafer technology in the Japanese market.

In the 2023 fiscal third-quarter earnings conference call, Mary Jane Raymond, the Chief Financial Officer of Coherent Inc., mentioned that the revenue composition of the company’s four main markets is as follows, based on regional distribution: North America accounts for 53%, Europe accounts for 20%, Japan and Korea account for 14%, China accounts for 11%, and 3% goes to other regions worldwide.

For Coherent, capturing 14% of the sales in the Japanese and Korean markets is highly significant. If Coherent continues its collaboration with Japanese partners, it is highly probable that the production capacity of SiC power devices in Japanese-related companies will be increased. Additionally, this will allow Coherent to further expand its influence and presence in Japan.

(Photo credit: Coherent)

As reported by TechNews, a media partner of TrendForce, Southeast Asia and India, equipped with the advantages of demographic dividends, strategic geographic positioning, manufacturing capabilities, and rapidly growing economic markets, have undoubtedly emerged as the preferred destinations for the technology industry amidst the global supply chain transition prompted by geopolitical factors.

As supply chains actively seek production bases beyond China and governments introduce incentive programs and policy restrictions for localized supply, various Southeast Asian countries have become key hubs for different sectors. Vietnam has become a focal point for consumer electronics manufacturing such as laptops, watches, and headphones, while Thailand has become a preferred choice for automotive-related supply chains. Thailand and Malaysia host assembly bases for servers, and India is set to become a crucial hub for mobile phone production.

Apart from the movement of end-product assembling, the shift in the semiconductor supply chain has also garnered attention. With TSMC, Samsung, and Intel relocating wafer fabrication plants to the United States, Europe, and other regions, a significant cluster of semiconductor backend testing and packaging has been forming in Malaysia.

What Advantages Does Malaysia Offer to Attract Multinational Semiconductor Companies’ Investment, and What Is the Current Industry Landscape?

Firstly, Malaysia boasts higher education standards than neighboring countries. Among ASEAN nations, only Singapore and Malaysia employ the British legal system, providing a competitive edge for many companies’ location choices. Secondly, in terms of language proficiency, Malaysian citizens predominantly use English, Mandarin, and Malay, facilitating smooth communication with global enterprises.

Thirdly, Malaysia is home to two major ports—Port Klang and Port of Tanjung Pelepas—both ranked among the world’s top 15 ports, with substantial container handling capacity and global reach.

Lastly, the state of Penang stands as a semiconductor hub for Malaysia, having nurtured the semiconductor industry for several decades and holding a technological lead. Often referred to as the “Silicon Valley of the East,” Penang has primarily focused on producing chips for electronics, computers, and mobile phones. However, with the growing adoption of electric vehicles, the demand for automotive chips has surged. Concurrently, the green energy trend has propelled the need for solar panels and renewable energy sources. This optimistic outlook for the semiconductor industry has once again attracted numerous companies to establish facilities and expand production capacity.

Current State of Malaysia’s Semiconductor Industry

Looking at the recent dynamics of corporations over the past two years, the trend is evident that Malaysia is evolving into a center for semiconductor backend testing and packaging. Major global players have announced plans to establish or expand operations in Penang. Intel, for example, announced a $6.46 billion investment in Malaysia in 2021, focusing on advanced packaging capabilities in Penang and Kedah.

Texas Instruments declared its intent to construct semiconductor testing and packaging plants in Kuala Lumpur and Malacca, with a total investment of up to $2.7 billion. Infineon is investing $5.45 billion to expand existing facilities, producing silicon carbide and entering the electric vehicle sector. Bosch Group is investing $358 million in stages to strengthen its semiconductor supply chain position in Penang. ASE Technology Holding, also began construction on a new testing facility in Penang at the end of last year.

With the influx of semiconductor giants, Malaysia’s position in the semiconductor industry has become increasingly critical. The distinct production base trends, aligned with the strengths of various Southeast Asian countries, have become clear. The restructuring of supply chains and the transformation of production centers undoubtedly remain the focus and challenge for global companies.

(Photo credit: ASE)