How will power electronics companies respond to Infineon Technologies?

Indeed, this acquisition comes in a power electronics industry where SiC technology benefits are well-known and where business opportunities have been clearly identified by industrial companies. In its latest compound semiconductor technology & market analysis report Power SiC 2016: Materials, Devices, Modules, and Applications (June 2016, Yole Développement), the 'More than Moore' market research and strategy consulting company Yole Développement (Yole) announced a $200m market in 2015 and a 19% CAGR between 2015 and 2021, reaching $550m by the period’s end.

Both Wolfspeed and Infineon Technologies are the market leaders and this pact reinforces their dominant market position. The deal also includes the related SiC wafer substrate business for power electronics and RF power electronics. According to Yole’s analyst Dr. Hong Lin, Infineon Technologies market share should increase more than 50% if the full acquisition is confirmed.

This year again, Yole has followed the compound semiconductor industry and especially the WBG market segment. The power electronics industry landscape is evolving, showing 'a new face', and power electronics consolidation is increasing, confirmed Yole’s analysts (Source: Status of the Power Electronics Industry 2016 report, Yole Développement, June 2016). International Rectifier and Infineon Technologies, Fairchild Semiconductor and ON Semiconductor, Wolfspeed and APEI … Today Infineon Technologies and Wolfspeed. The story is still unfolding. So who will be next?

“Wolfspeed and Infineon Technologies are leaders in the SiC power devices industry. The combination of both players will clearly strengthen the leading position of Infineon Technologies in the SiC power business,” explains Dr. Lin, Technology and Market Analyst at Yole. “This is a win-win acquisition,” says Dr. Lin. Yole continues its research within the power electronics and compound semiconductor industry day after day. The consulting company is a leader in this sector, releasing numerous technology and market reports each year and establishing dedicated custom collaborations with multiple companies throughout the supply chain. Dr. Lin provides the following analysis from Yole’s report:

• Infineon Technologies and Wolfspeed are both established SiC diodes players.
• Wolfspeed has developed a powerful SiC MOSFET solution, which is clearly more advanced than Infineon Technologies’ solutions, within the commercialisation phase: Wolfspeed’s Gen 3 has already been commercially available for two years and has a good reputation. From its side, Infineon Technologies just released its MOSFET component in May 2016. Within a SiC MOSFET market that is just taking off, Infineon’s acquisition of Wolfspeed ensures its development in this market segment.
• As no.1 in the incumbent silicon power business, Infineon Technologies has a well-established client portfolio. The German company has a strong understanding of the market’s needs, its players, and the technical specifications related to power electronics applications.
• The company also has significant experience in power packaging for semiconductors, which is considered the main SiC business bottleneck for power electronics today. Last year, Cree’s division, Wolfspeed acquired APEI to reinforce their packaging capability. Today, with the support from Infineon Technologies, Wolfspeed can further accelerate their product development and reaffirm the leadership of its technology approach.
• Infineon’s investment and large-scale production capability could support Wolfspeed in ramping up production and expansion.

This acquisition includes more than just Wolfspeed’s SiC devices for power electronics applications. It also includes the company’s activities focused on GaN on SiC for RF applications. According to Yole’s report entitled GaN RF Devices Market: Applications, Players, Technology, and Substrates 2016–2022 report (Yole Développement, June 2016), the GaN RF devices market will double in the next five years, thanks to widespread adoption within various market segments. As a result, Wolfspeed’s merger with Infineon gives them direct access to the emerging GaN RF market.

“At Yole, we see this acquisition as the beginning of a series of impressive collaborations within the SiC power business in the coming years,” says Dr Pierric Gueguen, Business Unit Manager at Yole.“And this industry trend is likely to continue and to further increase in the future.” Several recent mergers and acquisitions, such as Infineon Technologies and International Rectifier, ON Semiconductor and Fairchild Semiconductor, have launched the power electronics industry’s consolidation phase.

Infineon Technologies reaffirms its leading market position with both acquisitions during an 18-month period (from January 2015 to July 2016). The company secures its activities within the emerging WBG technology sector. What strategy will other power electronics companies adopt in response to Infineon Technologies? Do they have to make strategic technical choices? Will we see new collaborations, mergers or acquisitions in the near future? According to Yole’s analysts, it’s likely we will. So let’s see what story the following chapters will tell…