By Li Panpan

Chinese power semiconductor manufacturers will face intense competition with international giants, given global supply and demand changes. They need to improve their strength to enter the high-end markets such as automotive, said a recent JW Insights report.

The 14 listed power semiconductor companies on the Shanghai and Shenzhen Stock Exchange tracked by JW Insights, including CR Micro(华润微) and Silan Micro(士兰微), have an average year-on-year growth rate of 18.05% in revenue in the second quarter of this year. This is a drop from the average level of 30.12% in the first quarter and an average of 52.13% for the whole of 2021, with a more obvious gap in growth rate.

Infineon, On Semi, ST, Mitsubishi Electric, and FUJI Electric - the top five overseas power semiconductor manufacturers - had an average year-on-year growth rate of 21.67% in the second quarter, up from 19.14% in the first quarter.

The average growth rate indicates the consolidation of the dominant position of overseas giants. The Chinese manufacturers have faced a headwind in their rapid development since 2020 due to global chip shortage and local consumer electronics OEMs switching to local chip suppliers in large quantities.

The power semiconductor market has greatly benefited from the green and low-carbon agenda sweeping the world. The profound transformation of energy production and consumption structure, photovoltaic and wind power connecting to the grid, and the popularity of electric vehicles have brought huge incremental demand for power semiconductor chips.

Of all single-vehicle semiconductors in traditional fuel passenger cars, power semiconductors have only a value of around $100, according to the statistics by Infineon. But in pure electric and plug-in new energy vehicles, their values rise to about $1,000, with the switching and rectifying semiconductors taking up essential functions.

They have opened up unprecedented market space for Chinese suppliers. In the last couple of years, power semiconductors have been an easy sale. Capacity determined their revenue and market share. Those Chinese suppliers with more production lines and expanded capacity were winners.

Their growth also resulted from the shrinking of overseas giants to ensure the delivery of their high-margin products with centralized production capacity. However, since the beginning of 2022, things have changed.

From the demand side, the global sales of smartphones, PCs, and household appliances weakened in the first half of this year. Manufacturers all face the issue of reducing inventory for cash flow. Reducing or even suspending the procurement of materials such as semiconductors has become a common practice.

From the supply side, overseas power semiconductor giants have been expanding production capacity, driving a surge in spending on power-related semiconductor equipment. According to SEMI statistics, spending on such equipment increased by more than 200% in 2021, and it is expected to maintain double-digit growth in 2022 and 2023.

The changes in supply and demand have been reflected in the market conditions of some categories, such as power diodes and medium and low-voltage MOSFETs.

Infineon said that in the second quarter of 2022, it obtained