The power electronics supply chain is evolving. Yole Développement analysts confirm this trend in their latest technology and market report. Chinese companies' vertical integration is challenging diverse historical market leaders, while Europe & US companies are pushing horizontal integration. What is the shortest road to the success?
Under its new study, the "More than Moore" market research and strategy consulting company proposes a deep analysis of the power electronics technologies and business opportunities. Yole's analysts review the key market drivers and describe the impact on the supply chain. "The power electronics supply chain is very diverse and mostly application- and local market-dependent", explains Mattin Grao Txapartegi, Technology & Market Analyst at Yole. And he details: "European and American players for example, prioritize horizontal integration, keeping proven expertise in a specific level of the value chain". Such companies diversify their activities thanks to the acquisition of complementary knowledge and sign partnerships to develop their portfolio. They also outsource part of the manufacturing, especially with Asian partners. Moreover European and North American players propose R&D services. IMEC, APEI, Fraunhofer, PRIMES or GE Global research are some examples.
Under this report, Yole's team analyzes the major mergers and acquisitions of 2014, for instance International Rectifier's acquisition by Infineon, in order to understand their context and purpose. "The acquisition of International Rectifier is an important step for Infineon to foster our position as a global market leader in power semiconductors… said Dr. Reinhard Ploss, CEO of Infineon in the press release dated on last January 2015. Under this acquisition, Infineon enlarges its product portfolio. With a deep understanding of customers' needs, the power electronics leader accelerates its strategic approach "From product thinking to system understanding" (Source: Infineon Technologies press release).
In parallel, Asian companies select the vertical integration strategy in order to be fully integrated and optimize the costs. These players acquire competencies internally to build an overall system. Under this strategy, the Asian companies would like to enlarge their positioning all along the supply chain as well as reach local markets. "Some system manufacturers, such as Tesla or BYD, have understood the importance of developing their own power electronics and energy management systems for traction, chargers and batteries in order to offer extended added-value", says Dr Pierric Gueguen, Business Unit Manager for Power Electronics & Compound Semiconductor activities, Yole.
Japanese players are already vertically integrated and involved in multiple applications simultaneously to benefit from their technologies across different markets. Chinese players are developing this vertical integration in order to create major market leaders in each application segment such as SunGrow in PV, GoldWind in wind and BYD in EV/HEV.
In this report, Yole especially reveals a detailed analysis of the Chinese market, which is driven by Chinese Government policies. In this changing environment, western and Japanese players need to bring high added-value solutions to be able to compete with Chinese companies. Yole's report includes a complete section on main players' strategies.