The power semiconductor market is estimated to be valued at USD 52.56 Bn in 2024 and is expected to reach USD 54.92 Bn by 2031, growing at a compound annual growth rate (CAGR) of 4.5% from 2024 to 2031. Key drivers of the power semiconductor market include growing adoption of electric and hybrid vehicles coupled with increasing penetration of smart grids and smart homes.

Market Driver - Rising Demand for Industrial Automation

Integration of automation across industries is increasing in order to optimize productivity and reduce costs. Thereby, the demand for power semiconductors that control and regulate industrial automation equipment has seen a significant rise. Many manufacturing plants have highly complex automated production lines equipped with machines, robots, and sensors that require power semiconductors to function properly.

The packaging industry has benefited hugely from automation with robots performing arduous and repetitive tasks like packing boxes at high speed. Similarly, automotive manufacturers are automating vehicle production lines to achieve mass production capabilities. Activities like welding, painting, and assembly that were previously done manually are now controlled by robots and other automated equipment powered by semiconductors. This has led OEMs to focus on building smart, connected factories of the future with end-to-end automation requiring advanced power devices. Other industries like food & beverage processing, plastic manufacturing, electronics assembly are also automating to improve productivity through 24/7 operations and meeting rising consumer demand.

Market Driver - Development of Energy-efficient Devices

With growing environmental concerns around the world, there is a strong push for reducing energy consumption and transitioning to cleaner sources of power. This presents a massive opportunity for power semiconductor manufacturers to develop more energy-efficient devices that can help optimize energy usage.

Consumer electronic devices like laptops and smart phones that people use daily rely on compact power management ICs containing efficient gallium nitride or silicon carbide transistors. In industries, switching from conventionally inefficient motor drive systems or linear power supplies to devices utilizing wide bandgap semiconductors can substantially cut energy bills. GaN and SiC power modules deliver higher power densities at much smaller sizes and lower power losses during operation.

As environmental consciousness rises globally and energy efficiency becomes a deciding factor, semiconductor companies will look to continuously enhance their wide bandgap offerings. Continuous R&D is focused on improving device performance metrics like lower on-resistance, higher breakdown voltage and higher operating temperatures. Such innovation will accelerate the growth of green applications and drive greater power semiconductor market revenues.

Market Challenge - High Costs and Complexity of Power Semiconductors

The power semiconductor market faces significant challenges due to the high costs and complexity associated with power semiconductors. Power semiconductors cater to industries with high power requirements such as automotive, industrial motors, and renewable energy.

However, producing power semiconductors involves complex manufacturing processes that utilize expensive raw materials like silicon carbide and gallium nitride. This makes power semiconductor devices more costly compared to regular semiconductors used in consumer electronics.

Additionally, intricate cooling mechanisms are required to dissipate heat generated during operation. The cooling systems add further to production expenses. The technical complexities also mean longer development cycles for new power semiconductor designs. This high level of complexity poses significant barriers for companies working in the power semiconductor market.

Market Opportunity - Increasing Application of Schottky Barrier Diodes

The power semiconductor market provides opportunities for companies focused on new device types and materials. One such technology gaining prominence is Schottky Barrier Diodes (SBDs). Their ability to function at high switching frequencies also provides design advantages over other alternatives. These benefits have led to increasing application of SBDs across various industries that rely on power management and conversion

In electric vehicles, SBDs allow more compact and effective onboard chargers. They are also facilitating more efficient wireless charging systems. With electrification trends accelerating globally, the demand for power conversion and management is growing rapidly.

This growing requirement provides a massive opportunity for wider usage of SBDs across different applications involved in new energy systems. Companies developing advanced SBDs using wide bandgap materials can gain significantly in the power semiconductor market.

Strategy 1: Product innovation through continuous R&D investments

Infineon introduced its latest CoolSiC MOSFETs in 2018 which offer 30% lower switching and conduction losses compared to traditional silicon MOSFETs.

Strategy 2: Strategic acquisitions to expand product portfolio

In 2016, ON Semiconductor acquired Fairchild Semiconductor to enhance its power and analog solutions. This strengthened ON's position in automotive, industrial, and mobile markets.

Strategy 3: Focus on fast growing electric vehicle and renewable energy sectors

STMicroelectronics ramped up Silicon Carbide wafer production capacity from 4" to 6" between 2015-2019 to cash in on the rising EV market.

Strategy 4: Establishing strategic partnerships and supply agreements

In 2018, Mitsubishi entered a 5-year strategic partnership and a multi-year supply agreement with Renesas for automotive microcontrollers.

Insights, By Component: Power Integrated Circuits - Rise of System on Chip (SoC) Designs

In terms of component, power integrated circuits contributes 35.9% share of the power semiconductor market in 2024. This is owning to increasing demand for System on Chip (SoC) designs across various industries. Power integrated circuits incorporate power management and power saving systems on a single substrate which is ideal for applications requiring miniaturization of components.

The automotive industry has seen tremendous growth in demand for advanced driver-assistance systems (ADAS) that depend on power efficient SoC designs. This has boosted the market for power ICs as they integrate vital functions like voltage regulation, battery charging and power factor correction onto one silicon chip. Similarly, the proliferation of smart appliances and Internet-of-Things (IoT) devices has fueled the need for low power and multifunctional chips.

With growing digitization across sectors, the scope for customized power SoC designs combining logic, analog and power management features remains high. This presents an ongoing lucrative opportunity for power IC vendors in the coming years.

Insights, By Material: Ascendance of Wide Bandgap Materials

In terms of material, silicon/germanium contributes 47.3% share of the power semiconductor market in 2024. However, Silicon Carbide (SiC) and Gallium Nitride (GaN) based power semiconductors are gaining rapid acceptance due to their superior material properties compared to traditional Silicon. SiC devices can operate at much higher voltages, currents and temperatures than silicon. They reduce power losses significantly which makes them ideal for power conversion in electric vehicles, fast charging stations, renewable energy equipment and other similar applications.

Meanwhile, GaN semiconductors provide even higher efficiency than SiC at higher switching frequencies. They combine very low on-resistance with high breakdown voltage. The compact size of GaN components allows for more powerful and smaller power supplies. With continuous advancements in SiC and GaN semiconductor manufacture, their use is growing remarkably creating lasting demand shift from silicon over time.

Insights, By End-user Industry: Stimulation from Clean Energy Transition

In terms of end-user industry, automotive industry contributes the highest share currently driven by surging electric vehicle production worldwide. However, the Industrial Industry sector is emerging as a major end-user with progressive commitment towards carbon neutrality. Nations and corporations have outlined ambitious targets and timelines to shift towards cleaner sources of energy such as solar and wind power. This calls for robust power electronic systems for energy conversion, transmission and storage.

The growing commercial and utility-scale integration of renewables is thus stimulating power semiconductor consumption considerably. Semiconductor manufacturers are actively innovating product portfolios aligned with the technical needs of green energy industries. With the clean energy transition gathering momentum on a global scale, the industrial sector is expected to sustain high demands for power devices in the upcoming years.

• Adoption of SiC in Electric Vehicles: Companies like Tesla have integrated SiC power semiconductors in their vehicles, improving efficiency and driving range.
• 5G Infrastructure Expansion: Deployment of 5G networks increases demand for power semiconductors capable of handling higher frequencies and power levels.
• Automotive Sector Contribution: The sector accounts for 31.4% of the power semiconductor market, primarily due to the EV boom.
• Asia-Pacific Market Share: Holds approximately 42.7% of the global power semiconductor market, attributed to manufacturing hubs and consumer base.
• Shift Towards Renewable Energy: Investments in renewable energy are projected to increase power semiconductor demand by 8% annually in this sector.

The major players operating in the power semiconductor market include Infineon Technologies AG, Texas Instruments Inc., STMicroelectronics NV, Toshiba Corporation, Mitsubishi Electric Corporation, Renesas Electronic Corporation, Broadcom Inc., ON Semiconductor Corporation, ROHM Co., Ltd., Nexperia BV, Fuji Electric Co., Ltd., NXP Semiconductors N.V., Renesas Electronics Corporation, and Analog Devices Inc.

• In May 2024, Polar Semiconductor announced plans to expand its existing manufacturing facility in Bloomington, Minnesota, with a $525 million investment aimed at enhancing production capabilities. This expansion is expected to double the company's production capacity from approximately 20,000 wafers per month to nearly 40,000 wafers per month.
• In April 2024, Fuji Electric introduced the HPnC Series, a new line of large-capacity industrial IGBT modules designed for applications such as power converters in solar and wind power generation systems.
• In January 2024, Texas Instruments (TI) introduced the AWR2544, a 77GHz millimeter-wave radar sensor chip designed to enhance automotive safety. This chip is the industry's first single-chip radar sensor tailored for satellite radar architectures, which output semi-processed data to a central processor for advanced driver assistance systems (ADAS) decision-making.

• By Component
  • Power Integrated Circuits
  • Discrete
  • Module
• By Material
  • Silicon/Germanium
  • Silicon Carbide (SiC)
  • Gallium Nitride (GaN)
• By End-user Industry
  • Automotive Industry
  • Consumer Electronics Industry
  • Military and Aerospace Industry
  • IT and Telecommunication Industry
  • Industrial Industry
  • Other End-User Industries