Renesas & Transphorm: Infineon Technologies opens the doors for bold acquisitions in power GaN

Driven by the high margins of automotive, more M&As are expected in the rapidly evolving power GaN ecosystem.

In the power GaN industry’s second major acquisition in a year, following Infineon Technologies’ purchase of GaN Systems, US-based Transphorm is to be acquired by a subsidiary of Renesas Electronics Corp of Tokyo, Japan.

The acquisition adds to the billions of dollars invested in the power GaN industry since 2019 through partnerships, the construction of facilities, and M&As.

But what is driving this activity, and what does this new acquisition signal for the future of power GaN? Yole Group’s experts Milan Rosina and Taha Ayari provide their insights.

This snapshot is based on Yole Group’s compound semiconductor & power electronics collection, including the new Status of the Compound Semiconductor Industry report published this month. Discover HERE an overview of all Yole Group’s products.

The automotive industry is driving significant activity in power GaN

While the consumer industry has traditionally been the largest market sector in power GaN, the automotive market is set to experience the most significant growth in the next few years – Yole Group predicts the sector to be worth $504 million by 2028, growing at a 110% CAGR (source: Power GaN report, Yole Intelligence, 2023).

The sector is attractive for players such as Renesas and Infineon Technologies because it experiences higher margins and ROIs than the consumer sector.

The trend toward more integrated systems is notable in electric vehicles in particular, where OEMs are moving from today’s 3-in-1 unit that integrates an EV drive motor, gearbox and inverter – to 5-in-1, or even 8-in-1 systems (Discover Yole Group’s article focused on 8-in-1 powertrain from BYD) that also include power electronics controls such as DC-DC converters and on-board chargers. This is where the major opportunity lies for GaN to offer a high level of perceived value in reducing system costs, weight, volume and power losses.

Transphorm’s automotive-qualified GaN technology was mentioned explicitly by Renesas as a reason for its purchase, to enable the development of enhanced power solutions for EVs. This followed Renesas’ already strong ambition in targeting integrated power solutions for EVs with a recent partnership with Nidec, which will see the companies develop a 6-in-1 E-Axle.

Infineon Technologies/GaN systems acquisition more than double the value of Transphorm transaction

Like Transphorm, GaN Systems has significant strength in the automotive sector, which was a major reason behind the Infineon Technologies acquisition in 2023. However, at $830 million, Infineon Technologies paid more than double the $339 million Renesas paid for Transphorm. With the two companies similar in size, with a comparable market share, and strong GaN expertise and IP – what could be the reason behind the stark difference in value?

See below the ranking of the power electronics companies and the analysis of transphorm’s market positioning, both deeply detailed in Yole Intelligence’s annual reports: Status of the Power Electronics Industry and Power GaN.

Could it be that GaN System’s design-win pipeline is more attractive than Transphorm’s? In the automotive sector alone, it has partnerships with Hella, Vitesco, Canoo, among others. Unlike Renesas, Infineon Technologies already has in-house GaN capacity, so the upcoming business it could gain through design-wins is likely a big justification. And, thanks to design centres in Canada, the US, China and Taiwan, GaN Systems is in good stead to secure more of this type of business in the coming years. In this way, Infineon Technologies is playing the long game to secure a leadership position in the power GaN industry.

In contrast, it is likely that Renesas is satisfied with the in-house IP and GaN device production capacity it will gain (through Transphorm’s epitaxy capabilities and its interest in GaNovation’s AFSW wafer-fab). It is noteworthy that this AFSW fab is located in Japan, which may be considered as an advantage for Renesas to profit from a local GaN fab ready for high volume production.

Renesas already has experience on GaN technology, working with EPC and GaN Systems (now an Infineon company) to develop Systems like DC-DC converters and even space-grade devices (following the acquisition of Intersil). Upon the completion of Transphorm, Renesas will have a complete power electronics portfolio, with power ICs, Si power devices, SiC devices – after investing $2B in Wolfspeed to guarantee a 10-years SiC wafer supply – and Transphorm’s GaN products. Renesas is now on track to compete with the leading power electronics players such as Infineon and STMicroelectronics.

Nevertheless, there is still a question as to whether the acquisition, expected to close by mid-2024, will be approved, particularly with Transphorm’s work with the US government on several funded projects that can be related to Defense.

Who will be the newcomers and the next acquisition targets in power GaN?

In the next 5-10 years, IDMs are expected to become the dominant force in the power GaN ecosystem, as has been evident in the SiC industry, as correctly foreseen in Yole Intelligence’s last Power GaN report.

While some fabless companies will co-exist by expanding into different markets – for example Navitas, which has entered the SiC sector by acquiring GeneSiC – Yole Group’s analysts expect to see more M&As. Start-ups such as Wise Integration and Cambridge GaN Devices, or older companies like EPC, a leader in low-voltage devices, could be acquired in the near future. VisIC, which is particularly focused on the automotive sector, could also be an attractive target.

In addition to established power electronics semiconductor IDMs acquiring fabless companies, the industry is set to see newcomers outside of the power electronics industry. These could be players that have GaN LED activity, such as Osram, LG Electronics, and Ennostar, thanks to the synergies with the power GaN technology in terms of epitaxy and device fabrication.

The power GaN industry is set for an exciting evolution in the coming years. More generally, we have recently witnessed several investments from Japanese players in the WBGs, such us ROHM introducing its first GaN products, Denso and Mitsubishi investing $1B in Coherent for SiC wafers, and many others – follow Yole Group’s analysis to hear about these developments first.

Stay tuned!

About the authors

Taha Ayari, PhD is Technology & Market Analyst, Semiconductor Substrates at Yole Group. Taha’s expertise is mainly dedicated to power, RF, and optoelectronics. He is fully engaged in the development of technology and market products as well as custom projects.

Previously, Taha had 2 years’ experience as a Technology & Cost Analyst at Yole Group, where he focused on the development of compound semiconductor reverse engineering & costing analyses. Prior to Yole Group, Taha was a research engineer at Georgia Tech Lorraine (Metz, France). He published numerous papers with a particular focus on III-N materials. Taha holds an M.Sc. and a Ph.D. in Electrical and Computer Engineering from the Georgia Institute of Technology (Atlanta, USA).

Milan Rosina, PhD. is Principal Analyst, Power Semiconductor at Yole Group.

He is engaged in the development of the market, technology and strategic analyses dedicated to innovative materials, devices and systems. His main areas of interest are e-mobility, renewable energy, power electronic packaging and batteries. Milan has 20 years of scientific, industrial and managerial experience involving equipment and process development, due diligence, technology and market surveys in the fields of renewable energies, EV/HEV, energy storage, batteries, power electronics, thermal management, and innovative materials and devices.

He received his PhD. degree from Grenoble Institute of Technology (Grenoble INP) in France. Milan Rosina previously worked for the Institute of Electrical Engineering in Slovakia, Centrotherm in Germany, Fraunhofer IWS in Germany, CEA LETI in France, and utility company ENGIE in France.

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