In recent years, the tech industry has pivoted around two keywords, low carbonization and digitization, marking significant areas of growth. Semiconductor companies are eagerly investing and acquiring ventures, particularly in response to the emerging new energy industry chain driven by the low-carbon trend.

At the recent Infineon OktoberTech™ event, David Poon, Senior Vice President and President of Greater China Region at Infineon, outlined the company’s ambitious goals. By the end of 2030, Infineon aims to secure a 30% market share in the SiC market, targeting an annual revenue exceeding USD 7.6 billion. As per a report from 21jingji, Infineon also holds a positive outlook on the overall market growth of third-generation semiconductors.

The current landscape sees widespread application of third-generation semiconductors like SiC and GaN in new energy vehicles, charging stations, energy storage, and other products. Major industry players are actively entering this dynamic market. As a dominant force in power semiconductors, Infineon not only announced SiC expansion plans earlier this year but also acquired GaN Systems in October.

Speaking of recent GaN acquisition, Poon expressed during an interview that the collaboration between the two companies would significantly propel Infineon’s development. They believe that GaN has reached a turning point, extending its applications beyond chargers to encompass diverse fields like energy storage, heralding a phase of substantial growth. A new round of competition is unfolding within the realms of the new energy field and the industrial ecosystem.

New Energy and Digitization as Growth Drivers

In terms of performance, Infineon achieved remarkable double-digit growth in the past year. According to the full-year financial report for the 2023 fiscal year (ending September 30, 2023), the company’s revenue reached USD 17.868 billion marking a 15% YoY increase, while profits surged by 30% to USD 4.819 billion.

Jochen Hanebeck, CEO of Infineon, acknowledged the company’s record-breaking revenue and profits in the 2023 fiscal year, despite acknowledging the persisting challenges in the operating environment.

On one hand, there’s a persistent structural growth momentum in renewable energy, electric vehicles (particularly in China), and the micro controller sector within the automotive industry. On the other hand, demand for applications in consumer goods, communications, computing, and the IoT is currently experiencing a temporary lull. Infineon anticipates continued revenue growth in the 2024 fiscal year, although the pace of growth is expected to moderate. The company is actively responding to market conditions, seizing opportunities for structural growth.

The new energy and digitization markets emerge as the new growth engines targeted by leading semiconductor companies like Infineon. With China at the forefront of the industry’s new landscape, Infineon is keen on tapping into new opportunities in the Chinese market.

In an interview, Poon remarked, “Looking at low carbonization, firstly, the growth in new energy vehicles is substantial. According to data from the China Association of Automobile Manufacturers (CAAM), from January to September 2023, the production and sales of new energy vehicles reached 6.313 million and 6.278 million units, respectively, with YoY increases of 33.7% and 37.5%. The semiconductor value in an electric vehicle has increased by about USD 950 compared to a traditional fuel vehicle, making this a significant driving force.”

He further emphasized, “The amounts of domestic new energy vehicle shipments and exports are robust. Additionally, the proliferation of charging stations in the country indicates clear prospects for this market. In other areas of new energy, such as photovoltaics, wind power, and energy storage, these are also growth drivers we are closely monitoring.”

New energy vehicles and renewable energy have evolved into the foundational pillars of the burgeoning low-carbon mega-industry. Simultaneously, within the digitization market, Infineon offers solutions related to data centers. “Apart from data centers, in domains like smart factories, smart cities, and smart homes, we provide digitization and low-carbon solutions to enhance efficiency. Digitization serves as a significant driving force,” highlighted Poon.

SiC and GaN Operating in Tandem

In the current landscape of the new energy market, third-generation semiconductors such as SiC and GaN have gained significant traction. Taking the more mature development of SiC as an example, although it is still undergoing iterative development, it has found extensive applications in the automotive field, experiencing rapid growth.

TrendForce predicts that the SiC power component market in the automotive sector will witness substantial growth, from USD 1.09 billion in 2022 to USD 3.98 billion in 2026, with a compound annual growth rate of 38%.

Presently, SiC faces supply shortages, prompting major makers to scale up production. Infineon, for instance, has announced a substantial expansion of its Kulim wafer fab in Malaysia, aiming to establish the world’s largest 8-inch SiC power wafer fab. Poon noted that the first phase is slated to commence production in mid-next year, with the second phase scheduled for production in 2027. This expansion is driven by the broad market demand for SiC across applications like AI, automotive, and new energy photovoltaics.

As per TrendForce, the collective market size of SiC power components in 2023 reached USD 2.28 billion, witnessing a notable 41.4% YoY growth. Projections suggest that by 2026, the SiC power component market could reach an impressive USD 5.33 billion, with the automotive sector’s SiC power component market poised to surge to USD 3.94 billion.

Besides Infineon, major players like Wolfspeed and STMicroelectronics are actively bolstering their production capacities. In June this year, STMicroelectronics announced plans to establish an 8-inch SiC device manufacturing joint venture with Sanan Optoelectronic in China. The commencement of production is anticipated in the fourth quarter of 2025, with full completion scheduled for 2028, involving a total construction cost of approximately USD 3.2 billion. Wolfspeed, in collaboration with the German automotive giant ZF Group, not only established a joint innovation laboratory for SiC but is also in the process of constructing a SiC device factory in Germany.

According to TrendForce, The GaN market is primarily propelled by consumer electronics, with a core emphasis on fast charging. Other consumer applications include audio, wireless charging, power, and consumer products. However, many companies have already shifted their focus to industrial markets such as data centers, renewable energy, and the new energy vehicle market, with numerous companies persistently conducting R&D in this direction.”

Overall, semiconductor giants are strategically navigating both SiC and GaN, intensifying efforts in the realm of third-generation semiconductors and fortifying a more comprehensive industrial chain.
(Image: Infineon)

What started as a groundbreaking acquisition in the SiC/GaN third-generation semiconductor and power semiconductor sector came to a satisfying conclusion on October 24th.

In March 2023, the leading power semiconductor manufacturer, Infineon, announced its plan to acquire GaN Systems, a top Canadian producer of GaN chips, for $830 million. After over half a year of negotiations and regulatory approvals, the transaction officially closed on October 24, 2023. With this, GaN Systems is now officially part of Infineon, and the synergistic effect of this powerhouse alliance is set to make a significant impact.

Currently, Infineon boasts a workforce of 450 GaN technology experts and holds more than 350 GaN technology patents. GaN Systems, on the other hand, ranks among the world’s top five GaN power device manufacturers. According to TrendForce’s “2023 GaN Power Device Market Analysis Report-Part 1,” GaN Systems held a 12% market share based on revenue in 2022, securing the fifth spot globally. In addition, GaN Systems made early inroads into the high-growth automotive power semiconductor market and secured orders from renowned automaker BMW.

From a technological, application, customer base, and market influence perspective, it’s evident that the acquisition of GaN Systems complements Infineon’s position in compound semiconductor and power semiconductor market. This collaboration creates synergies that significantly benefit Infineon.

As Infineon stated, this move further expands their leadership in the power semiconductor sector and substantially reduces the time to market for new products. Both companies complement each other in terms of intellectual property, a deep understanding of applications, and well-established customer project planning, providing a highly favorable environment for Infineon to meet the demands of various rapidly growing applications.

The landscape of the GaN power semiconductor market may undergo significant changes

In the future, the competition landscape within the entire compound semiconductor market, especially in the GaN power semiconductor sector, is likely to undergo significant changes, marking the onset of an integration phase in industry chain competition.

As for the GaN power component market, up until 2023, Infineon had not secured a position among the world’s top manufacturers. However, following the merger, Infineon is poised to join the top ranks. Based on 2022 data, TrendForce’s estimate indicate that the combined market share of both companies could reach 15%, on par with EPC’s 2022 market share of 15%, and there is a potential for surpassing it in the future.

For the compound semiconductor market, it’s worth noting that, in addition to acquiring GaN Systems this year, Infineon has been making further inroads into the GaN field. In simple terms, its involvement in the GaN power semiconductor market is continuously strengthening.

In May of this year, Infineon announced its participation in a collaborative European research project named “ALL2GaN,” joined by 45 partner organizations, with a project budget of €60 million. The project is focused on developing integrated GaN power designs from chips to modules, primarily catering to applications in telecommunications, data centers, and server facilities. Infineon leads the ALL2GaN project, with other participants including imec, a Belgian microelectronics research center, Nexperia, Ericsson, and other enterprises.

Through accumulating expertise from this project, Infineon’s influence in the European GaN power semiconductor field is expected to further enhance. In the Asian market, Infineon operates a factory in Malaysia, with a current focus on SiC (Silicon Carbide). GaN Systems has established offices in Shenzhen and Taiwan, demonstrating an increased commitment to the Asia-Pacific region.

GaN Systems has also reinforced its presence in the European and American markets. Firstly, its Canadian headquarters in Ottawa has undergone a threefold expansion. Secondly, GaN Systems has inaugurated a new design center in Dallas, Texas, gradually expanding its business scope in North America and Europe, while comprehensively advancing its global expansion plan.

Considering these developments, Infineon is poised to conduct its global operations more effectively, gaining a more influential role in the GaN power semiconductor market. This is expected to lead to a gradual increase in business scale and market share.

Furthermore, the collaboration between these two industry giants is set to catalyze the industrialization of GaN, particularly in high-power applications such as automotive and data centers. According to TrendForce’s estimates, the global GaN power component market is projected to grow from $180 million in 2022 to $1.33 billion by 2026, with a remarkable compound annual growth rate of 65%. With proactive efforts from industry leaders like Infineon and GaN Systems, power applications are poised to become the primary growth engine in the GaN domain, accelerating the overall expansion of the GaN market size.

DB HiTek, a Specialty IC foundry in South Korea, is intensifying its research efforts in the Silicon Carbide (SiC) and Gallium Nitride (GaN) semiconductor domains to support future business growth, Jiwei reported.

DB HiTek’s recent investments aim to bolster its 8-inch wafer manufacturing capabilities. Nevertheless, due to a slow market recovery, reports suggest that the operation of the 8-inch wafer foundry may face challenges, and the transition to a 12-inch wafer foundry operation remains a question mark. In light of this situation, DB HiTek’s future development will pivot towards new power semiconductors such as GaN and SiC.

The company has reportedly initiated investments in essential equipment for next-generation GaN and SiC power semiconductors, a move set to expedite their research and development.

It is reported that DB HiTek, housing an 8-inch wafer foundry, is gearing up to venture into the SiC market, while the 6-inch wafer foundry remains the norm in this sector. As part of government policy initiatives, this specialized foundry is collaborating with Busan Techno Park for Silicon Carbide development.

In GaN semiconductor manufacturing, DB HiTek is partnering with the fabless company A-PRO Semicon to fine-tune their foundry processes.

As per the company’s website, DB HiTek operates two wafer foundries, producing ICs across a range of manufacturing nodes from 350nm to 90nm. Fab 1 in Bucheon City, Gyeonggi-do, offers chip solutions within the 150nm to 350nm nodes, including mixed-signal, power, and analog chips. Fab 2 in Eumseong County, Chungcheongbuk-do, provides solutions suitable for the 90nm to 180nm process nodes, including mixed-signal and CMOS image sensors (CIS), among other applications.
(Image: DB HiTek)

Read more:

• [News] Strategic Shift in Samsung’s Personnel Focuses on SiC

According to a report from South Korean media ETNEWS, Samsung Electronics has appointed former Onsemi director Stephen Hong as Vice President to oversee the SiC (Silicon Carbide) power semiconductor business. They’ve also set up an internal department dedicated to SiC power semiconductors.

Stephen Hong, an expert in power semiconductors with around 25 years of experience at major global companies like Infineon, Fairchild, and Onsemi, is leading this effort after joining Samsung.

Stephen Hong is currently in the process of assembling a team for SiC commercialization, while actively engaging with South Korea’s power semiconductor industry ecosystem and academic institutions for market and business feasibility studies. It’s noteworthy that when Samsung officially ventured into the GaN (Gallium Nitride) business, it had also formed relevant business teams in advance.

It’s expected that Stephen Hong will be pivotal in devising the direction and strategies for Samsung’s SiC power semiconductor business. In addition, Samsung Electronics has commenced comprehensive preparations for the GaN power semiconductor business. Samsung’s commitment to this endeavor is underlined by its decision to acquire Aixtron’s latest MOCVD equipment, specifically for processing GaN and SiC wafers. This investment is estimated to be at least 700-800 billion Korean won, roughly equivalent to 0.54-0.62 billion US dollars.

Although Samsung’s third-generation semiconductor foundry business is expected to launch in 2025, it is currently in the research and sample stage, necessitating significant investments in equipment to support future mass production endeavors.

In accordance with TrendForce’s analysis, the global SiC power device market is projected to reach $2.28 billion in 2023, with a notable YoY growth of 41.4%. It is expected to expand to $5.33 billion by 2026.

Samsung made a strategic shift by planning to produce GaN and SiC semiconductors on 8-inch wafers, deviating from the common 6-inch approach and gaining industry attention. The increased focus on SiC aligns with the challenges faced by its wafer foundry business, where fluctuations in fab utilization rates significantly impact financial performance.

According to the most recent research from TrendForce, there’s an expectation that Samsung’s utilization rate for its 8-inch wafer fabrication facility could drop to 50% in 2024. This decline is largely due to a worldwide reduction in semiconductor demand, compounded by geopolitical factors, creating a tough business environment that has affected Samsung’s order volume.

As the demand for SiC and GaN power semiconductors continues to rise and Samsung confronts challenges in its Si wafer business, the company, along with competitors like DB Hitek and Key Foundry, is gearing up to launch 8-inch GaN foundry services. This strategic move is anticipated to come to fruition between 2025 and 2026.

In response to these multifaceted dynamics, Samsung has taken an accelerated approach to GaN and SiC, with the aim of capturing a more substantial market share and breathing new life into its traditional wafer foundry business.

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• SiC vs. Silicon Debate: Will the Winner Take All?
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(Image: Samsung)

The digital world is undergoing a massive transformation powered by the convergence of two major trends: an insatiable demand for real-time insights from data, and the rapid advancement of Generative artificial intelligence (AI). Leaders like Amazon, Microsoft, and Google are in a high-stakes race to deploy Generative AI to drive innovation. Bloomberg Intelligence predicts that the Generative AI market will grow at a staggering 42% year over year in the next decade, from $40 billion in 2022 to $1.3 trillion.

Meanwhile, this computational force is creating a massive surge in energy demand—posing serious consequences for today’s data center operators. Current power conversion and distribution technologies in the data center can’t handle the increase in demand posed by the cloud and machine learning—and certainly not from power-hungry Generative AI applications. The quest for innovative data center solutions has never been more critical.

Gallium Nitride (GaN) semiconductors emerge as a pivotal solution to data center power concerns, helping counter the impact of Generative AI challenges. We dive into how Generative AI affects data centers, the advantages GaN, and a prevailing industry perception of the Power Usage Effectiveness (PUE) metric—which is creating headwinds despite GaN’s robust adoption. With Generative AI intensifying power demands, swift measures are essential to reshape this perception and propel GaN adoption even further.

The rising impact of Generative AI on the data center

Today’s data center infrastructure, designed for conventional workloads, is already strained to its limits. Meanwhile, the volume of data across the world doubles in size every two years—and the data center servers that store this ever-expanding information require vast amounts of energy and water to operate. McKinsey projects that the U.S. alone will see 39 gigawatts of new data center demand, about 32 million homes’ worth, over the next five years.

The energy-intensive nature of generative AI is compounding the data center power predicament. According to one research article, the recent class of generative AI models requires a ten to a hundred-fold increase in computing power to train models over the previous generation. Generative AI applications create significant demand for computing power in two phases: training the large language models (LLMs) that form the core of generative AI systems, and then operating the application with these trained LLMs.

If you consider that a single Google search has the potential to power a 100W lightbulb for 11 seconds, it’s mind-boggling to think that one ChatGPT AI session consumes 50 to 100 times more energy than a similar Google search. Data centers are not prepared to handle this incredible surge in energy consumption. One CEO estimates that $1 trillion will be spent over the next four years upgrading data centers for AI.

Unfortunately, while technologies like immersion cooling, AI-driven optimizations, and waste heat utilization have emerged, they offer only partial solutions to the problem. A critical need exists for power solutions that combine high efficiency, compact form factors, and deliver substantial power outputs. Power electronics based on silicon are inefficient, requiring data centers to employ cooling systems to maintain safe temperatures.

GaN: Unparalleled performance and efficiency

GaN offers unparalleled performance and efficiency compared to traditional power supply designs, making it an ideal option for today’s data centers—particularly as Generative AI usage escalates. GaN transistors can operate at faster switching speeds and have superior input and output figures-of-merit. These features translate into system benefits including higher operating efficiency, exceeding Titanium, and increased power density.

GaN transistors enable data center power electronics to achieve higher efficiency levels—curbing energy waste and generating significantly less heat. The impact is impressive. In a typical data center environment, each cluster of ten racks powered by GaN transistors can result in a yearly profit increase of $3 million, a reduction of 100 metric tons of CO2 emissions annually, and a decrease in OPEX expenses by $13,000 per year. These benefits will only increase as the power demands of Generative AI increase and rack power density rises 2-3X.

While the benefits of GaN are profound, why aren’t even more data center operators swiftly incorporating the technology? Adoption faces headwinds from what we call the “PUE loophole”—an often-overlooked weakness within the widely accepted PUE metric.

The PUE Loophole

The PUE metric is the standard tool for assessing data center energy efficiency, calculated by dividing the total facility power consumption by the power utilized by IT equipment. The metric helps shape data center operations and guides efforts to reduce energy consumption, operational costs, and environmental impact.

Data center operators continuously strive to monitor and improve the PUE to indicate reduced energy consumption, carbon emissions, and associated costs. However, the PUE metric measures how efficiently power is delivered to servers—yet it omits power conversion efficiency within the server itself. As a result, the PUE calculation does not provide a comprehensive view of the energy efficiency within a data center—creating a blind spot for data center operators.

Consider that many servers still use AC/DC converters that are 90 percent efficient or less. While this may sound impressive—10 percent or more of all energy in a data center is lost. This not only increases costs and CO2 emissions, but it also creates extra waste heat, putting additional demands on cooling systems.

GaN is remarkably effective in addressing the PUE Loophole. For instance, the latest generation of GaN-based server AC/DC converters are 96 percent efficient or better – which means that more than 50 percent of the wasted energy can instead be used effectively. Across the entire industry, this could translate into more than 37 billion kilowatt-hours saved every year—enough to run 40 hyperscale data centers.

GaN can provide an immediately cost-effective way to close the PUE loophole and save high amounts of energy. But because the PUE doesn’t consider AC/DC conversion efficiency in the server, there is no incentive to make AC/DC converters more efficient.

This article was authored by Paul Wiener, Vice President of Strategic Marketing at GaN Systems.

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(Photo credit: Google)