STMicroelectronics, Tesla and Apple: what happens when eMobility & 5G collide

With STMicroelectronic’s full Q4 report just around the corner, industry players anticipate robust results after early revenues exceeded expectations. Preliminary revenues hit $3.24 billion, significantly higher than the $2.99 billion guidance, as semiconductor sales rose on the back of rising automotive product and electronic device demand.

STMicroelectronics’ success in these markets hinges on two key customers: electric vehicle pioneer, Tesla, and tech giant, Apple. Each has thrived throughout the SARS-CoV-2 pandemic.

During 2020, at a time when manufacturing stalled for many auto-OEMs, Tesla pressed on with production at its China-based Giga Shanghai factory, raising capacity across the year. Meanwhile, as demand for smartphones and work-from-home devices strengthened, Apple iPhone shipments continued to rise. Critically for STMicroelectronics, it supplies key components to both industry heavyweights.

Yole Développement’s imaging, compound semiconductor and power electronics teams, Pierre Cambou, Ezgi Dogmus, Ana Villamor, and Milan Rosina, provide a snapshot of STMicroelectronics’ activities and its status, just a few days before the financial statements, Q1 2021 are presented later this week.

For STMicroelectronics and Tesla, it has always been about silicon carbide. Back in 2018, Tesla became the first high-class car manufacturer to integrate a full SiC power module to the traction motor of its Model 3. At the time, a tear-down from System Plus Consulting revealed the small, high power density, inverter power module contained ST Microelectronics’ SiC MOSFETs – the future of both STMicroelectronics and SiC in electric vehicles were sealed. More info. Tesla Model 3 Inverter with SiC Power Module from STMicroelectronics

Since this discovery, the market for SiC in automotive products has grown. Tesla’s adoption of the SiC traction inverter signaled to electric and hybrid vehicle auto-makers, far and wide, that the technology could be used in the safety-critical traction inverters, where device reliability is key. And today, OEMs across the world are busy developing SiC solutions for this e-mobility market.

For STMicroelectronics, this spells good news as it manufactures modules for the key electrical blocks in a vehicle, including traction inverters, onboard chargers and DC to DC converters. However, proving its traction inverter technology with Tesla remains pivotal to its success.

Relative to onboard chargers and DC to DC converters, traction inverters are the highest value e-mobility market segment with the largest growth potential. These critical main inverters contain the most SiC MOSFETs, command the biggest revenues from device sales and are required in all electric and hybrid electric vehicles. In contrast, the onboard charger is only used in plug-in hybrid electric (PHEVs) and battery electric vehicles (BEVs), whereas DC/DC concerns lower power conversion (lower component content).

Largely thanks to Tesla, STMicroelectronics has a firm foothold in the burgeoning e-mobility market segment and is today’s power SiC device market leader. Its partnership with the Renault-Nissan-Mitsubishi Alliance on on-board chargers has helped to bolster its position while more recent deal with Chinese BYD has also fuelled Q4 figures. In parallel, Yole Développement (Yole) analyses indicates STMicroelectronics to remain Tesla’s number one supplier.

But what about SiC capacity constraints? It is no secret that businesses, including Cree, Rohm, Infineon Technologies, ON Semiconductor, Mitsubishi Electric, and STMicroelectronics, have been grappling with six-inch wafer supply, with shortages threatening margins and revenue.

Many industry actors, including STMicroelectronics, saw this coming, expanding capacity and striking long-term supply agreements to fill the gap. However, in December 2019, STMicroelectronics also acquired Swedish SiC wafer manufacturer Norstel.

With Norstel, STMicroelectronics intends to strengthen its internal SiC wafer supply while removing its reliance on external wafer sources – indeed, STMicroelectronics now plans to address more than 40% of internal production by 2024. What’s more, R&D on 8-inch wafers is also underway, placing the company in a strong position for the industry transition to larger wafers that lies ahead.

STMicroelectronics’ revenues and strategy are followed by Yole’s analysts with the Compound Semiconductor Quarterly Market Monitor.

Clearly STMicroelectronics’ relationship with Tesla and its solid auto-industry strategy are paying off. However, the company’s highly anticipated Q4 2020 results will also be heavily bolstered by Apple.

Although a little-known player in CMOS image sensors (CIS), STMicroelectronics held 6% of revenue in this $19.3 billion market in 2019, which is expected to grow to at least $20 billion in 2020. Its 6% CIS market slice delivered the company to fourth place in an industry dominated by Sony and Samsung, which together occupied just over 60% market share in 2019.

Meanwhile, CMOS image sensor manufacturer, OmniVision Technologies, took third place with 10% of the market. Market figures are coming from the CMOS Image Sensor Quarterly Market Monitor, developed by the imaging team at Yole.

STMicroelectronics’ strength in the CIS market is closely linked to 3D imaging & sensing in Apple platforms. Back in 2017, STMicroelectronics seized several sockets in the Apple iPhone X with its near-infrared (NIR) image sensor for the truedepth structured light camera and a Time of Flight (ToF) proximity detector also featuring a flood illuminator.

Fast-forward to today and STMicroelectronics is providing ToF proximity detectors and NIR CMOS image sensors to much of Apple’s iPhone 12 line-up, undoubtedly driving sales across Q3 2020.

What’s more, following a bottleneck in supply, production of Apple’s smartphones partially shifted to Q4, which is expected to fire up STMicroelectronics revenues in this last quarter.

But it is not all about Apple. STMicroelectronics’ multi-zone ToF detectors also feature in the recently released Samsung Galaxy S21 smartphone, buoying revenues. And unlike US players, the company has not suffered so much from the Huawei trade bans, with a recent licence to build devices for the beleaguered Chinese multinational holding potential for future production here.

Still, a key threat looms – capacity. Likely thanks to its ample manufacturing capacity, Sony’s direct ToF image sensor was recently integrated to Apple’s iPad Pro and the latest iPhone 12 series. More Sony sensors are expected to be integrated in future Apple devices.

While STMicroelectronics continues to secure more foundry space for many of its systems, Yole has yet to see it take this strategy with its CIS products – and this could limit future opportunities in the CIS market.

Still, with strong Q4 2020 results expected very soon, what comes afterwards?

Only time will tell if STMicroelectronics will win more Tesla and Apple deals, but without a doubt its revenue dynamics will remain inextricably entwined with these industry leaders for many quarters yet.

About the authors

Pierre Cambou MSc, MBA, is a Principal analyst in the Photonics and Sensing Division at Yole Développement (Yole).

Pierre’s mission is dedicated to imaging related activities by providing market & technology analyses along with strategy consulting services to semiconductor companies.

At Yole, Pierre is responsible for the CIS Quarterly Market Monitor while he has authored more than 15 Yole Market & Technology reports.

Pierre has an Engineering degree from Université de Technologie de Compiègne (France) and a Master of Science from Virginia Tech. (VA, USA). Pierre also graduated with an MBA from Grenoble Ecole de Management (France).

Ezgi Dogmus, PhD. is Team Lead Analyst in Compound Semiconductor & Emerging Substrates activity within the Power & Wireless Division at Yole Développement (Yole).

She is managing the expansion of the technical expertise and the market know-how of the company.

In addition, Ezgi actively assists and supports the development of dedicated collection of market & technology reports, monitor as well as custom consulting projects.

After graduating from University of Augsburg (Germany) and Grenoble Institute of Technology (France), Ezgi received her PhD. in Microelectronics at IEMN (France).

Milan Rosina, PhD, is Principal Analyst, Power Electronics and Batteries, at Yole Développement (Yole), within the Power & Wireless division. 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 EV/HEV, renewable energy, power electronic packaging and batteries.

He received his PhD degree from Grenoble Institute of Technology (Grenoble INP) in France.

Ana Villamor, PhD serves as a Technology & Market Analyst, Power Electronics & Compound Semiconductors within the Power & Wireless division at Yole Développement (Yole). She is involved in many custom studies and reports focused on emerging power electronics technologies at Yole Développement, including device technology and reliability analysis (MOSFET, IGBT, HEMT, etc). In addition, Ana is leading the quarterly power management market updates released in 2017.

She holds an Electronics Engineering degree completed by a Master and PhD. in micro and nano electronics from Universitat Autonoma de Barcelona (SP).

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