Key players in the power electronics industry, including Infineon, ABB, Cree, and Rohm, are all looking to capture market share in individual end markets through technology innovation and differentiated market strategies. Some of this critical innovation includes pushing the limits of silicon’s performance to investing in new material flavors, such as gallium nitride (GaN) and silicon carbide (SiC). As for technologies, strategies also vary in terms of internal R&D versus partnerships, value returned to R&D and M&A activities, and geographic and application breadth. The question is, who comes out on top and which companies are struggling to make it in the power electronics industry? We benchmarked 12 leading power electronics companies, contrasting them on their innovation performance and their business execution. For the former, analysis of R&D spending and the last five years of patent portfolios, innovation-impacting acquisitions, divestments and partnerships, and overall new product portfolio was analyzed, weighted and aggregated. For business execution, factors included profitability, liquidity, solvency and acquisitions, whereas partnerships focused on market access.
Infineon is a clear winner on both metrics, having consistently maintained its market share (on a revenue basis) despite other companies clamoring to compete with it across all markets. In terms of technology innovation the company has invested and successfully released products not only in silicon – 1200 V and 1700 V IGBT modules, 1700 V integrated power modules, 600 V CoolMOS, and 650 V trenchtop IGBTs for automotive applications – but also in new flavors of materials, including SiC and GaN. NXP, Microsemi, and Rohm follow behind Infineon. NXP, for example, scored lower on its patents and product releases (it has released only two new power electronics products in the last few years), bringing its overall innovation score down. Without any major acquisition or a breakthrough product, none of these companies is likely to offer Infineon tough competition in the near future.
At the opposite end of the spectrum are the likes of Renesas, ON Semiconductor and Panasonic. Renesas, for example, scored poorly on both business and technology-related acquisitions and partnerships as well as new product releases. While Renesas has a core strength in microcontrollers for the automotive industry, it lacks strength in any other product segment. ON Semiconductor has some ongoing work in GaN with Transphorm to develop power supplies, although it has no concrete strategy to execute on this. Panasonic falls to the bottom on this grid given its weak scores across the board. The company acquired Sanyo in 2010, but that did not give Panasonic the strength it needed in power electronics. The company has a very narrow portfolio of products, which it has failed to expand on or offer any real technology differentiation. Fairchild, too, has barely managed to stay alive; without drastic measures, it could be wiped out entirely.
The laggards should look to diversify away from power electronics in to the Internet of Things (IoT) market. These companies will need to invest in sensors-related technologies – whether that has to do with developing sensors or powering them – to survive. ON Semiconductor has made a big move in this space by acquiring Aptina – a CMOS image sensor company. Fairchild released its first MEMS product in July 2015, which appears to be the silver lining in the company’s story. However, if it does not act fast, it will be wiped out of the industry. In contrast, Infineon will need to watch out for competition from high-profile GaN startups to stay ahead of the innovation game in GaN. The company may ultimately need to acquire a startup like GaN Systems or VisIC that gives it the competitive edge in GaN.
Innovation and business strategies are available for any existing or aspiring market participant to shore up their respective activities or acquire pieces that go on the offense around the vulnerabilities of others. Knowing those strengths and vulnerabilities in the markets that will grow is the key.