Power Electronics

Improving the Health of the Power Industry

Reflecting on recent financial reports released by major power semiconductor suppliers and market numbers presented by analysts, it appears the downturn period is over, and the semiconductor industry overall is in the recovery mode. A recent forecast released by the Semiconductor Industry Association (SIA) suggests global sales of semiconductors in 2003 increased by 15.8% to $163 billion. Sales are projected to increase by 19.4% to $194.6 billion this year. This robust semiconductor growth is being attributed to recovery in key areas such as computing, communications and consumers. The slow convergence across these products is giving PCs and notebooks a new lease on life, while wireless mania is driving consumers to a new era in communication mobility. Also, rising semiconductor contents that promise to deliver more bells and whistles in current and future automobiles, along with resurgence in the industrial sector, are factors contributing to the improved health of the industry.

That bodes well for the power semiconductor devices, ICs and discretes, which are a subset of the overall semiconductor industry. Consequently, it was encouraging to see major power semiconductor suppliers posting revenue gains last year with projections for vigorous growth this year. Based on data compiled from major players in this arena, market analysts are projecting better revenues this year, as well as for the following two years. Driven by increased demand for wireless and broadband technologies, and a strong consumer sector, the industry is well positioned to grow from 2003 to 2006, according to a recent study by market research firm Venture Development Corp (VDC). VDC's market numbers indicate that combined worldwide shipments for power supply and power management ICs totaled about 5 billion in 2003 and are expected to increase at an annual growth rate of 8.8% until 2006, reaching close to $7 billion in 2006.

Taking power discretes into account, the numbers look even better. Together, power ICs and power discretes grew 14% in 2003 over 2002 and are projected to achieve a 15% growth this year, according to iSupply, a market research and analysis firm. In fact, the research firm's data indicate that from 2002 to 2004, the average growth rate for the power semiconductor segment will outperform the overall semiconductor growth.

Companies that invested in new products and continued to broaden their product portfolio during the downturn are now reaping the benefits. Consequently, there was no dearth of new and improved devices released last year to meet the current and emerging needs of these markets. Hopefully, the same or perhaps higher fervor will be demonstrated this year. With much broader product lines, these suppliers were ready to grab the opportunity at the least provocation, and are now prepared to ride the wave. In addition to delivering higher levels of integration and better efficiency from compact packages at competitive process, these suppliers are offering custom solutions to differentiate customers' end products — a strategy that's paying off. Moreover, those who are well positioned in the fast-growing Asian market are seeing the improvement in revenues to move forward. Unlike previous years, when the U.S and Japanese markets dominated the world scene, the market dynamics are changing. As a result of this shift, the new growth is being spurred by the Asian market, reports the latest VDC study.

This cycle of downturn and upturn will continue, as witnessed over the last few decades. Those who refuse to become complacent or take things for granted are better prepared to sustain such cycles in the industry.

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