Infineon upbeat on next-gen power chips as broader market struggles

European chipmaker Infineon is betting on next-generation power semiconductors — used in everything from superfast phone chargers to electric vehicles — to spur growth amid a downturn in the broader chip market.

Power semiconductors are part of power management systems and are able to withstand high voltages and currents. Infineon is targeting advanced materials that promise even greater capacity and efficiency than conventional silicon-based power chips.

Adam White, the company’s president of power and sensor systems, told Nikkei Asia that Infineon is particularly optimistic about gallium nitride (GaN) chips.

“We have a goal to be the [chip industry] leader in power systems,” White said. “We see a tipping point happening real-time for gallium nitride.”

The company forecasts that the market for gallium nitride chips will grow at an annual rate of 56 per cent by 2027.

Infineon recently disclosed an $830mn deal to acquire Ottawa-based chip designer GaN Systems in a move to boost its product portfolio and “strengthen its leadership” in the power systems area, according to White.

The deal, which is subject to regulatory approval, would nearly double the headcount of its research and development team specialising in gallium nitride chips to more than 450 people and increase the number of its customers to 2,000 worldwide, White told Nikkei Asia.

Power supply chips built on gallium nitride are more power-efficient, and the same capacity can be squeezed into a smaller space than with chips built on normal silicon wafers, which means chargers and adaptors can be made smaller as well.

For example, the current iPhone 14 adapter has an output of 20 watts, but with gallium nitride materials, that could be increased to around 120 watts at a similar size. For users, that would mean being able to fully charge their smartphone in less than 10 minutes, according to industry executives and analysts.

Both gallium nitride and silicon carbide (SiC), another area of interest for Infineon, are known as wide bandgap semiconductors. Compared to the more common silicon-based chips, wide bandgap chips can handle higher voltages and are more durable at higher temperatures. Of the two, silicon carbide is considered more suitable for power chips used in high-power electric vehicle chargers and energy storage systems.

In addition to the GaN Systems acquisition, Infineon is spending €2bn to enlarge its production capacity for gallium nitride and silicon carbide chips at its plants in Kulim, Malaysia, and Villach, Austria.

GaN Systems works closely with Taiwan Semiconductor Manufacturing Co, the world’s biggest contract chipmaker, for the actual production of its chips. This arrangement will continue even after Infineon’s acquisition of the Canadian company is completed, White said.

Conventional silicon-based power supply chips are still important, he said, citing Infineon’s decision to invest €5bn to boost production of such chips in Dresden, Germany. However, less growth is expected in this area compared with wide bandgap semiconductors, he added.

Infineon’s peers STMicroelectronics and US chip developer Navitas are also betting big on gallium nitride. On the silicon carbide front, some market leaders such as Wolfspeed, Rohm and On Semiconductor are expanding capacity, too. Many emerging Chinese players, including Innoscience, TankeBlue Semiconductor and Sanan IC, are venturing into wideband gap chips, an area of chipmaking not affected by US export controls. Leading Apple supplier Foxconn is also working to produce silicon carbide chips in-house.

Infineon is already the world’s biggest maker of various power-related semiconductors for solar and wind renewable energy infrastructure and vehicle electrification.

Brady Wang, a semiconductor analyst with Counterpoint Research, said there is no doubt that wide bandgap semiconductors will be a key growth driver for the market due to demand for better power supply solutions, the growing electrification of vehicles and greater energy storage needs.

“In the short term, we think the wide bandgap semiconductor market will still lead the growth momentum for [the] power chips market and outperform the overall semiconductor market, and be dominated by existing chipmakers in Europe, the US and Japan. But China is catching up quickly and making a lot of efforts,” Wang said. “We believe that these emerging players could eventually take some market share in years to come, when the market will have also become much bigger than it is now.”

A version of this article was first published by Nikkei Asia on March 16 2023. ©2023 Nikkei Inc. All rights reserved.

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