[Insights] Power Semiconductor Slowdown, China’s Shift to 12-Inch and IGBT

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Power semiconductors, the key of energy conversion and circuit control in electronic devices, find themselves at the heart of electronic circuit functions such as power conversion, amplification, switching, and rectification. They play a pivotal role in various sectors like automotive, industrial, rail transportation, and electricity. As the new energy industry, led by solar energy and electric vehicles, advances, power semiconductors like IGBT and MOSFET emerge as key players in the realm of green energy.

The power semiconductor market, previously driven by the surge in the new energy sector, particularly in new energy vehicles, solar power, and energy storage, has experienced robust overall demand. China, being the global leader in both new energy vehicles and solar energy production, has significantly contributed to the strong demand for power semiconductors. However, the current trend indicates a slowdown in the power semiconductor market.

According to TrendForce’s latest report, titled “Power Semiconductor Deceleration, Chinese Companies Breaking Through in 12-inch Wafers and IGBT,” it shared a comprehensive analysis of China’s role in the development of the power semiconductor industry. The following highlights summarize the key points of this report:

1. Slowdown in Chinese Foundries due to Downturn in Consumer Electronics and Communication Sectors

In the first half of 2023, prominent Chinese foundries—SMIC, Hua Hong Semiconductor, Nexchip, and SMEC—encountered a slowdown in revenue growth. Among them, only Hua Hong witnessed a marginal revenue increase, while SMIC, Nexchip, and SMEC experienced YoY revenue declines of 19.29%, 50.43%, and 24.08%, respectively. The overall performance of Chinese wafer fabs is entering a downward cycle due to a sluggish market in consumer electronics, PCs, and communication.

2. IGBT Emerges as the Growth Driver Amidst Deceleration in the Power Semiconductor Market

Despite a comparative growth with digital ICs, the overall growth in the power semiconductor market is decelerating. Hua Hong’s revenue from discrete devices increased by 33.04% YoY in the first half of 2023, yet the growth rate is lower than that of the same period in 2022. The number of top-ten listed power semiconductor companies with negative revenue growth has expanded from one in 2022 to four, and those with negative net profit growth increased from one to eight.

While the overall growth is slowing, IGBT remains the driving force for power semiconductors. Companies like Silan and CR Micro have initiated mass production of IGBT, experiencing a rapid growth rate in the IGBT business. Additionally, Wingtech is making its foray into the IGBT sector. Notably, between January and July 2023, 17 IGBT projects were initiated or signed, with a cumulative investment exceeding CNY 15 billion, indicating a swift expansion by Chinese companies in the IGBT domain.

3. China’s Power Semiconductor Giants Scale Up from 8-Inch to 12-Inch

Major Chinese power semiconductor players are transitioning from 8-inch to 12-inch wafers. Notably, Hua Hong has already implemented 12-inch capacity, and the expansion of the Wuxi Phase 2 project is underway. SMIC’s third-phase 12-inch special process wafer line produced its initial 10,000 wafers in June 2023. In the IDM sector, companies like Wingtech, Silan, and CR Micro are actively constructing 12-inch wafer fabs, with some of the capacity already in operation.