Power IC Tags to Fall 4% in 2013

Buyers should expect lower price tags for power ICs and stable lead times at least through the first quarter of 2014

By Gina Roos

Image of Infineon 300mm Wafer
Infineon has completed qualification of its 300-mm thin wafer line and is now producing some of its CoolMOS MOSFETs in high-volume production at its front-end site in Dresden, Germany.
Power semiconductor manufacturers expect normal price erosion between 3% to 4% in 2013 for discrete devices including diodes, rectifiers, transistors, MOSFETS and IGBTs. Lead times are also stable, ranging between four to 12 weeks, depending on the product type and packaging. Suppliers do not foresee any major changes in pricing trends or lead times in the fourth quarter or first quarter of 2014.

Average selling prices (ASPs) this past year have dropped around 4% compared to the previous year, according to Ryan Scott, marketing manager, Infineon Technologies AG, Livonia, Mich. This is in comparison to a 10% increase in 2011.

"We are going through a little bit of a dip," says Scott. "It's normal to have some kind of reduction in these markets. Typically, if you can get a 3% ASP reduction and you're able to improve cost by 4%, that is a win. It's all relative to how that is addressed."

Similarly, Eric Hertz, vice president/general manager of Low Voltage & Standard Products Group, Fairchild Semiconductor, San Jose, Calif., expects a net ASP erosion of about 3% across all its products.

Image of Ryan Scott, marketing manager, Infineon Technologies
Average selling prices (ASPs) this past year have dropped around 4%, compared to the previous year, says Ryan Scott, marketing manager, Infineon Technologies.
"At the beginning of the year we started to see some rapid ASP erosion, but it has leveled off,” Hertz says. “We haven't seen much ASP erosion in the second half beyond the computing market, which typically has a normal quarter-on-quarter erosion.

"Overall, it's been a relatively stable ASP erosion year.”

ASPs for discretes will decline by a compound annual growth rate (CAGR) of 2.3% from 2012 to 2017, a slightly higher rate of decline than was predicted in last year's report, notes Victoria Fodale, senior semiconductor market analyst for IHS. She says ASPs for rectifiers and MOSFETs declined the most in 2012, while ASPs for discrete IGBTs were more stable than other products. Competitive pressures and a lack of demand also contributed to the lower ASPs.

Component suppliers say they don't expect any pricing issues around raw materials costs heading into 2014. Suppliers agree that raw materials pricing has been "relatively stable."

However, the cost of energy and labor continues to be an issue that both suppliers and buyers need to watch.

"It's the cost of energy and labor that is not going down," Scott says. "When it comes to energy costs to produce the devices, we foresee that as moving up."

Looking ahead, component manufacturers don’t anticipate any big changes in pricing trends.

"Overall, ASPs don't drop as dramatically as people make it out to be, and we don't see anything in the first quarter changing that," says Scott.

Buyers should also expect relatively stable lead times next year. Infineon's average lead times for MOSFETS and diodes are about 12 weeks, although deliveries for some smaller commodity parts range between three to four weeks.

"The overall business picked up," says Scott. "The first and second quarters were lower than expectations, and the third and fourth quarters have picked up a little bit. We're hoping lead times will remain at 12 weeks in the fourth quarter and into next year."

Average lead times for Fairchild Semiconductor's power semiconductors range between six to eight weeks, although some products are available in four weeks.

"The supply chain has done a great job here to bring those lead times down. Products with four-week lead times are the ones where there is more inventory, and once that gets depleted it quickly pops back up. That's why we're looking at six to eight weeks as healthy for us," says Hertz.

Image of Eric Hertz, vice president/general manager of Low Voltage & Standard Products Group, Fairchild Semiconductor
"At the beginning of the year, we started to see some rapid ASP erosion, but it has leveled off. We haven't seen much ASP erosion in the second half beyond the computing market, which typically has a normal quarter-on-quarter erosion," says Eric Hertz, vice president/general manager of Low Voltage & Standard Products Group, Fairchild Semiconductor.
Overall, supply in the channel is "balanced and healthy," adds Hertz. "It crept up a little bit from Q2 to Q3 but nothing out of the ordinary. We're seeing good POS activity globally."

Hertz notes that two of the biggest challenges are "getting our hands around market volatilities that are more of the norm nowadays, and managing the supply chain whereby we don't have too much extra capacity and have the ability to manage surge capacities when they come in."

Fairchild has been reassessing and changing equipment and manufacturing flows in order to be more flexible across platforms, particularly in the mobile space that continues to change at a very rapid pace.

"We're pretty diversified in mobile as well as more industrial type areas, which tend to have a lot longer design cycles versus mobile," says Hertz. "What we've done is put things in place that enable us to be more flexible for both of those models."

Fairchild is better positioned to manage surge volumes, and lead times of six to eight weeks compared to 20+ weeks one year ago reflect that ability, according to Hertz. One way Fairchild has handled spikes in demand is by engaging with subcon foundries "to help augment our internal capacities. We're building up our flexible capacities utilizing more of our subcon foundry networks."

The semiconductor manufacturer also is improving its manufacturing processes and technologies, continuing to shift from 6- to 8-in. wafer factories. This is in combination with developing better core technologies that Fairchild can use in various applications.

"We're addressing market volatilities head on," says Hertz.

Infineon Technologies also has been working on improvements in the area of manufacturing. The company recently achieved a major breakthrough in the manufacture of its power semiconductors, transitioning to 300-mm thin wafers starting with some of its CoolMOS MOSFET parts. The company has already expanded beyond its prototype line in Villach, Austria, to a full-production line in Dresden, Germany.

"We are currently the only power manufacturer to offer power semiconductors built on a 300-mm or 12-in. wafers," says Scott.

Upshot for buyers: more chips can be made from each wafer, along with improvements in productivity and performance.

See related article: Power ICs: NPIs Drive Tighter Relationships with Distributors

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