As stated in a report published by Straits Research, the valuation of the worldwide power semiconductor industry amounted to $40 billion in 2020. The projected value is likely to reach $55 billion by 2030, with a compound annual growth rate (CAGR) of 3.3% throughout the forecast period 2022–2030.
The “Power Semiconductor Market Trend, Growth to 2022–2030” study examines different types of power semiconductors—including discrete, power modules and power integrated circuits—and different types of materials (silicon, germanium, silicon carbide and gallium nitride).
Power semiconductors are a special kind of electrical component made to manage high currents and/or high voltages. In many electronic systems, they play an essential role in managing and directing the flow of electrical energy. Applications involving high power levels are well-suited to power semiconductors due to their ability to tolerate larger voltages and currents than regular semiconductor devices.
The wide-bandgap semiconductor materials SiC and GaN have garnered considerable interest in power electronics owing to their distinctive characteristics. Both SiC and GaN are vital components in the progression of power electronics, as they provide enhanced efficiency, increased power density and operational frequencies in comparison with conventional silicon-based devices. The distinctive characteristics of these entities render them highly suitable for a diverse array of applications spanning multiple industries.
A major driver of the market expansion (Figure 1) is anticipated to be the uptick in research and development efforts aimed at improving material capabilities, particularly wide-bandgap materials.
Driving factors and risks
According to the research, the market’s growth is fueled by the increasing demand for consumer electronics worldwide. A wide variety of consumer products rely on semiconductors today, including communication devices (such as smartphones, tablets, smartwatches and others), computers (both personal and business computers), entertainment systems and household appliances.
The smartphone sector stands out as the leading consumer of semiconductors in this market, with fierce competition observed in recent years. Moreover, the surge in mobile phone usage is expected to drive the global market forward. For example, Ericsson predicts a significant increase in global smartphone data traffic, from 32 exabytes in 2019 to a projected 221 exabytes per month by 2026.
According to the India Brand Equity Foundation, the Indian appliances and consumer electronics market is forecasted to grow at a CAGR of 9%, reaching INR3.15 trillion (approximately $48.37 billion) by 2022. This anticipated growth is set to further bolster market expansion in the foreseeable future.
Alongside the rising demand for consumer electronics and wireless communication, other factors, such as the increasing need for energy-efficient battery-operated portable devices, are projected to stimulate demand and positively influence market expansion.
While Li-ion is still the predominant technology for powering consumer devices, some limitations pose challenges for these modern batteries. Enhancing battery life has become a prevalent trend in this industry, prompting global efforts to develop more energy-efficient battery solutions. Market growth in this sector is propelled by manufacturers enhancing the battery capacity of their products, thus satisfying consumer demands for faster charging times. The increasing demand for energy-efficient battery technology will fuel market expansion in the forecast period.
The major risks that could hamper market expansion include the global silicon wafer shortage and the challenges related to driving SiC power devices. As stated in the research, the primary objective of SiC-based devices is to replace IGBTs. Nevertheless, the driving prerequisites for these two devices differ significantly. Transistors commonly exhibit driving needs that necessitate the utilization of symmetric rails, such as ³ 5 V. On the other hand, SiC devices necessitate asymmetric rails (ranging from –1 V to –20 V) due to the need for a low negative voltage to guarantee complete deactivation. The use of these devices in portable equipment may be hindered by the requirement for additional DC/DC drivers or specific batteries with three connectors (+, 0 V and –). Therefore, these obstacles hinder the expansion of the market.
The increasing usage of power semiconductors across various industries, such as IT and consumer electronics, automotive, power distribution and rail transportation, is anticipated to be fueled by a continuous uptick in alternative energy sources. The automotive industry’s uptake is primarily motivated by a growing need for enhanced power management and novel safety features for consumers. Certain electric-vehicle applications are already integrating SiC technology for functions like battery chargers, auxiliary DC/DC converters and solid-state circuit breakers. More efficient drivetrains based on SiC power devices allow engineers to meet high voltage and power requirements cost-effectively.
Market segmentation by region
The worldwide market for power semiconductors has been divided into five main regions: Europe, Latin America, Asia–Pacific, North America, and the Middle East and Africa.
With a projected CAGR of 3.6% throughout the forecast period, the Asia–Pacific region will continue to dominate the market. Power semiconductor sales are likely to be the highest in Asia–Pacific, thanks to the region’s already dominant position in the global semiconductor industry and the backing of government laws. Roughly 65% of the global market for discrete semiconductors is accounted for by only four countries: China, Japan, Taiwan and South Korea. The dominance of the region’s market is greatly enhanced by the presence of other countries, such as Vietnam, Thailand, Malaysia and Singapore.
India is supposedly a great place for multinational research and development centers, according to the Indian Electronics and Semiconductor Association. As a result, the semiconductor industry is expected to benefit from the government’s continuous “Make in India” initiative. Furthermore, the region is a major player in the electronics manufacturing industry, cranking out millions of goods per year for domestic and international markets. The increasing production of electronic goods and parts has a significant impact on the market share of the industry being studied.
North America ranks as the second-largest region in the semiconductor industry. Projections suggest it will reach approximately $8.5 billion by 2030, with a CAGR of 2.6%. Known for its early adoption of new technologies in manufacturing, design and research, North America leads the way in semiconductor innovation. The region’s growth in the power semiconductor market is closely tied to advancements in key end-user industries, such as automotive, IT, telecommunications, military, aerospace and consumer electronics.
In January 2021, the Semiconductor Industry Association (SIA) reported direct sales of $40.0 billion, marking a notable increase of 13.2% from January 2020’s total of $35.3 billion. Representing 98% of the U.S. semiconductor industry revenue and a significant portion of non-U.S. chip firms, the SIA plays a pivotal role in the sector. Moreover, shifts in U.S. policies affecting semiconductor supply are anticipated to bolster domestic manufacturing and equipment investments.
Europe ranks as the third-largest region, with some of the most pivotal technological centers worldwide, and plays a substantial role in advancing and embracing contemporary technology. The market’s growth is propelled by the expanding integration of modern technologies and the rising utilization of semiconductors across diverse industries. The increasing engagement of regional governments in facilitating research initiatives has bolstered numerous sectors focused on semiconductors, a trend that is further facilitated by the presence of a robust technological infrastructure. The German government pledged to augment the quantity of research enterprises to 20,000 and inventive enterprises to 140,000 by 2020. Europe experienced a 6.4% growth in semiconductor sales in 2019, as reported by the World Semiconductor Trade Statistics and SIA. These advancements contribute to the expansion of the industry.
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