Power Market Weakens - Long-Term Outlook Remains Strong

Author:
Ryan Sanderson, Senior Market Analyst, IMS Research

Date
11/18/2011

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Ryan Sanderson, Senior Market Analyst, IMS Research

2011 has been an unsettled year for power semiconductor manufacturers. Revenues in the Q1 of 2011 grew by less than 1% over Q4, as end-equipment demand weakened and inventory levels remained high. The Fukushima disaster in March introduced uncertainty over component supply to the market and led to additional orders for suppliers outside of Japan as customers sought to eliminate the risk of having to reduce their own production. This drove higher growth in the second quarter of 2011 with a sequential increase of almost 5%, however, a disappointing result in the third quarter for many, and a double-dip' recession looming, has left suppliers uncertain about what to expect for short and long-term market growth. Recent analysis from IMS Research's, "Power Management Quarterly Market Watch", which includes analysis of power discrete, power module and power IC markets, revealed almost flat sequential growth in the third quarter of 2011. The outlook for the remainder of 2011 and the first half of 2012 is also projected to be weaker than previously believed. High levels of supply-chain inventory, coupled with dampened consumer spending are largely driving this and now that the situation with semiconductor supply from Japan is more or less back to normal, OEMs are reducing their inventory stocks. In general IMS Research predicts stronger growth to return in the second half of 2012 though this will differ considerably by product and application. The power semiconductor discrete market appears to have been most impacted by this and we're predicting a decline in revenues for the next three consecutive quarters. The outlook for power ICs is somewhat better over the next few quarters. This contrast in growth is driven by demand in end-applications which have high power IC content. The on-going shift of consumers to smart phones continues to drive revenue growth of power ICs such as DC-DC switching regulators, PMUs and battery management ICs. Smart phone adapters also favour an AC-DC regulator solution (with an integrated FET) rather than a solution using power discretes. Similarly, retrofit LED light bulbs are also driving strong growth for AC-DC regulators. Both the computing and consumer markets have weakened considerably in recent months; however, annual growth for power ICs is still forecast to remain at an average of 9% to 10% each year through to 2015. Infineon Technologies remained the largest supplier to the power semiconductor market in the first half of this year, growing its share from 9.6% to 9.9% in the second quarter of 2011. The remaining top five suppliers are made up of STMicroelectronics, Texas Instruments, Renesas Electronics and International Rectifier. Texas Instrument's recent acquisition of National Semiconductor should however strengthen its position as the largest supplier of power ICs, moving it to second position overall in the total power semiconductor market. Texas Instruments held an estimated 5.0% share of the overall power semiconductor market in 2010, whilst National Semiconductor held an estimated 2.7%. In comparison Infineon Technologies was the largest supplier with an estimated 9.4% market share and STMicroelectronics was the second largest with a 6.4% share. All of these suppliers will be bracing themselves for a tough few quarters, but also preparing for the future growth ahead of the industry in the long-term. www.imsresearch.com

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