1. Industry overview: 100 billion track, mature markets superimposed on emerging pure incremental markets

ØPower semiconductors are used in all power electronics fields, and the market is mature and stable with slow growth. The development of the industry mainly relies on the huge demand gap brought by emerging fields such as new energy vehicles, renewable energy power generation, frequency conversion home appliances, etc. Mature market size: According to IHS Markit data, the global power device market size in 2018 was US$39.1 billion, and the Chinese power market size was US$13.8 billion, accounting for 35% of the global market. Pure incremental market size: We mainly measured the market space of applied power semiconductors in the four fields of domestic new energy vehicles, charging piles, photovoltaics and wind power. ①The market demand in the field of new energy vehicles will be approximately 16 billion yuan in 2025 and approximately 27.5 billion yuan in 2030. ② The cumulative market demand in the field of public DC charging piles from 2020 to 2025 is approximately 14 billion yuan, and the cumulative demand from 2025 to 2030 is approximately 40 billion yuan. ③The cumulative market demand in the photovoltaic field from 2020 to 2025 is approximately 5 billion yuan, and is expected to grow further with policy adjustments. ④The cumulative market demand in the wind power field from 2020 to 2024 is about 3 billion yuan. Overall, the domestic power semiconductor market's pure incremental scale in the four fields is expected to reach 20 billion yuan in 2025. ØAccording to Omdia data, the top ten power semiconductor companies in the world in 2018 are from the United States, Europe and Japan, with a combined market share of 60%. The domestic power semiconductor market's self-sufficiency rate is low, with the self-sufficiency rate of mid- to high-end power MOSFETs and IGBTs less than 10%, leaving huge room for domestic substitution.

2. Industry development trend 1: There is no need to catch up with Moore's Law, relying heavily on process technology, packaging design and new material iteration, and the overall trend is integration and modularization

ØThe overall progress of power semiconductors depends on iteration of process technology, packaging design and new materials. Design link: The power semiconductor circuit has a simple structure and does not require a large investment in architecture, IP, instruction set, design process, software tools, etc. like digital logic chips. Manufacturing: Since there is no need to catch up with Moore's Law, the production line is not highly dependent on advanced equipment, and the overall capital expenditure is small. Packaging: It can be divided into discrete device packaging and module packaging. Since power devices have very high reliability requirements and require special designs and materials, the post-processing value accounts for more than 35%, which is much higher than the 10% of ordinary digital logic chips. ØImproving performance and reducing costs promote the development of integrated and miniaturized chips. According to Omdia's forecast, the discrete device market will grow at a rate of 2.2% from 2020 to 2024, while the power module market will grow at a rate of 5.4%. Emerging markets have increased the demand for mid-to-high-end products such as IGBTs and power MOSFETs. According to WSTS statistics, the global growth rate of power MOSFET is 7.6% and that of IGBT is 8.9%. At present, according to the research projects and product layout, domestic companies are beginning to transform into mid-to-high-end products with higher value.

3. Industry development trend 2: New energy and 5G communications promote the rise of third-generation semiconductors

Ø Emerging applications such as new energy and 5G are accelerating the industrialization demand for third-generation semiconductor materials. my country’s market space is huge and it is expected to quickly shorten the gap with overseas leaders in this field. ① Tianshi: The third generation materials have the potential to replace silicon materials in high-power and high-frequency application scenarios, and the industry as a whole is in the initial stage of industrialization. ② Geographical location: Driven by the demand from emerging markets such as downstream new energy vehicles, 5G, and fast charging, as well as the potential silicon material replacement market, the current in-depth research and industrialization directions are mainly SiC and GaN, and the domestic market space is huge. ③Renhe: The core difficulty of third-generation semiconductors is material preparation. Other links can achieve a very high degree of localization, and the country will provide strong support in terms of policies and funds. We believe that the industry’s technology catch-up is faster, the entry threshold is lower, and the degree of localization is higher. It will bring more development space to domestic power semiconductor companies and substrate material suppliers in the medium and long term with greater certainty.

4. Industry development trend three: The IDM model is more suitable for the power semiconductor industry, and foundry can provide production capacity and process technology supplements.

Ø Leading overseas power semiconductor companies all adopt the IDM model. The business model of the domestic power semiconductor industry is based on IDM, supplemented by design + foundry. At present, domestic IDM companies (such as Silan Micro) and foundry companies (such as SMIC Shaoxing) are actively expanding production capacity and upgrading production lines, upgrading from 4/6 inches to 6/8 inches or even higher, and overall catching up with the international mainstream level. The expansion of production capacity can be considered as the company's technical reserves and product performance have reached the level of similar international products, and subsequent revenue growth will be achieved by developing customers and seizing market share. ØThe parallel operation of IDM and OEM is in line with the current situation of the domestic industry structure. The dual-mode operation does not conflict. It effectively utilizes China's production capacity resources and achieves complementary advantages. The IDM model can increase product gross profit and establish technical barriers. my country's characteristic process and packaging technology are at the internationally advanced level, and process technology and production capacity deployment are complete. Long-term cooperation between power semiconductor companies and foundry companies can supplement production capacity and obtain process technology support.

investment advice

We recommend Wingtech Technology (600745), the global leader in standard devices with strong comprehensive strength; China Resources Micro (688396), the leader in OEM and IDM models, with the most comprehensive power device product line in China; Yangjie Technology (300373), the domestic leader in power devices; Jiejie Microelectronics (300623), the domestic leader in thyristors; Star Semiconductor (603290), the domestic leader in IGBT modules;

At the same time, it is recommended to pay attention to: China Microelectronics (600360), the veteran power IDM leader that is moving into the mid-to-high end through product portfolio adjustment; Sanan Optoelectronics (600703), the leader in compound semiconductor foundry; Taiji Co., Ltd. (300046), a high-quality high-power device company; Silan Microelectronics (600460), the leader in IDM with rich product lines; Perry Co., Ltd., the leader in high-voltage and high-power thyristors (300831).

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