According to IHS Markit data, China is the world's largest consumer of power semiconductors. In 2018, the demand for power semiconductors in China reached US\$13.8 billion, with a growth rate of 9.5% and accounting for 35% of global demand. It is expected that the size of China's power semiconductor market will reach US\$15.9 billion in 2021, with a compound annual growth rate of 4.8%, slightly higher than the global growth rate. The huge market demand also means that domestic manufacturers have a large space for import substitution.

Currently, the domestic power semiconductor industry chain is becoming increasingly perfect, and technology is also making breakthroughs. According to Yole data, in the field of diodes and BJTs, which have lower technology and process levels, the supply rate of Chinese power semiconductor manufacturers is close to 50%. However, in the core components of power semiconductors, such as IGBT modules, IGBT single tubes, and MOSFETs, the self-sufficiency rate of domestic manufacturers is only 38% on average.

A research report from Great Wall Securities analyzes that MOSFETs and IGBTs have excellent characteristics and broad application prospects, and are expected to become the fastest-growing power semiconductor devices in the next 5 years, with huge potential for import substitution.

With the continuous emergence of new applications in industrial, automotive, wireless communication, and consumer electronics fields, and the increasingly urgent need for energy saving and emission reduction, China has a huge market demand for power semiconductors. With the support of favorable national policies, power semiconductors will become the best breakthrough point for "China Chip".

In recent years, many domestic power semiconductor manufacturers have emerged and made significant preparations for the layout of high-end fields.

Last week (August 19), the 12-inch automotive-grade power semiconductor automated wafer manufacturing center project of Wingtech was officially located in Shanghai Lingang. The total investment of the project is 12 billion yuan, and the expected annual production capacity after reaching production is 360,000 pieces. Since Wingtech completed the acquisition of Nexperia, a world-renowned semiconductor IDM company, for 33.8 billion yuan in 2019, it has also become a leader in the domestic power semiconductor industry.

Nexperia, headquartered in Nijmegen, the Netherlands, has more than 60 years of experience in semiconductor R\&D and manufacturing. Its predecessor was the Philips Semiconductor Standard Products Division. Nexperia has an annual production capacity of more than 100 billion units (all automotive-grade products), and is a global leader in various sub-fields, including the world's No. 1 in diodes and transistors, No. 2 in logic chips, No. 1 in ESD protection devices, and No. 2 in automotive power devices.

The completion of this acquisition has also enabled Chinese manufacturers to rank among the top 20 automotive semiconductor manufacturers in the world. Due to the high barriers formed by the automotive semiconductor supply chain and product verification cycle, the global automotive semiconductor industry structure is very stable, and there are not many new players with scale. Currently, under the trend of automotive electrification exceeding US\$200 million, the unit value of power semiconductors is growing the fastest.

In addition, Huarun Micro is currently a major domestic enterprise with the ability to research and develop and manufacture all mainstream MOSFET device structures. The devices produced include trench gate MOS, planar gate VDMOS, and super junction MOS, etc. It is currently one of the few domestic enterprises that can provide a full series of low, medium, and high-voltage MOSFET products in the range of -100V-1500V. According to IHS Markit statistics, in terms of sales, Huarun Micro ranks third in the domestic MOSFET market, second only to Infineon and ON Semiconductor.

In addition, there is JieJie Microelectronics, which has a domestic market share of 45% in the thyristor and protection device segment, second only to overseas giants such as ST and NXP. Other domestic manufacturers such as Yangjie Technology, Taiki Shares, Huawi Electronics, Star Semiconductor, and Xin Neng have also grown rapidly in recent years.

In the future, with the rapid growth of domestic manufacturers and changes in the external environment, the urgency of localization of the Chinese power semiconductor market supply chain will become increasingly strong. Improving technology and products and deploying high-end core components will be an important direction for the breakthrough of the "China Chip" power semiconductor.