The advance of the European semiconductor triumvirate

How strong are the traditional three European powers

Infineon, ST and NXP as representatives of European semiconductor companies, their layout in the semiconductor industry is worthy of our attention.

How strong are the traditional three in Europe
According to ICinsights released the global top 15 semiconductor companies in the first quarter of 2021 sales, Infineon and ST are the European semiconductor manufacturers included in this list, ranked 12th and 14th respectively. The report further highlights that if pure fab TSMC is excluded, then NXP, headquartered in the Netherlands, will also make this list. According to the report, in Q1 2021, NXP’s revenue was $2.503 billion.

The advance of the European semiconductor triumvirate

It is worth noting that, in ICinsights statistics show that Infineon and ST in the quarter sales have achieved double-digit year-on-year growth. NXP is not far behind, according to its financial results, NXP first quarter year-on-year growth of 27%.

From this data, it can be seen that the European semiconductor manufacturers in the semiconductor industry still occupies a position that can not be ignored.

The cornerstone of the status of European semiconductor manufacturers
As one of the early development of the semiconductor industry, Europe will be the automotive semiconductor and industrial semiconductor two market segments as its development of semiconductor industry focus on the direction. Based on this, Europe has also bred giants in automotive and industrial semiconductors, which is the cornerstone of the European semiconductor companies to be on the list.

Specifically, Infineon has four business units, respectively, automotive electronics (ATV), industrial power control (IPC), power management and diversified markets (PSS) and digital security solutions (CSS). According to its official website, its automotive division is responsible for business related to automotive electronics semiconductors. The Industrial Power Control segment focuses on power semiconductors primarily for industrial applications, while the Power and Sensor Systems segment focuses on consumer-oriented applications and power supplies. Activities related to classic and new safety applications are combined in the “Connected Safety Systems” segment.

According to Infineon’s financial results for the second quarter of fiscal year 2021 ending March 31, 2021, the company reported revenues of €2.7 billion and a gross margin of 36.0 percent for the quarter.

The advance of the European semiconductor triumvirate

(Infineon’s revenue and gross profit for the second quarter of fiscal 2021)

In terms of business segmentation, Infineon’s ATV segment, which generated revenues of EUR 1,219 million in the second quarter, is also the largest source of Infineon’s revenues. They occupy an industry-leading position in several segments of automotive semiconductors, including automotive power devices and power supply devices. In addition, in industrial control, Infineon also occupies the first position in many areas of the industry.

The advance of the European semiconductor triumvirate

(Infineon’s automotive business profile, source: Infineon)

The advance of the European semiconductor triumvirate

(Infineon’s industrial control business profile, source: Infineon)

From ST’s side, the company is divided by product into three divisions: Automotive Products and Discrete Devices Products (ADG), Analog Devices, MEMS and Sensors Products (AMS), and Microcontrollers and Digital IC Products (MDG).

According to ST’s financial results for the first quarter of fiscal year 2021, net revenue for the first quarter was $3.016 billion, up 35.2% year-over-year, with a gross margin of 39.0%. In terms of business segmentation, the ADG business had net revenue of $1.043 billion, accounting for 35% of the company’s total revenue; the AMS business had net revenue of $1.083 billion, accounting for 36% of the company’s total revenue; and the MDG business had net revenue of $886 million, accounting for 29% of the company’s total revenue.

The advance of the European semiconductor triumvirate

(ST’s gross profit in the first quarter of fiscal 2021)

In terms of market position, according to Morgan Stanley’s Global MCU Market Review 2020 and Market Outlook 2021 report, ST has a dominant position in the 32-bit MCU market. ST also has notable performance in areas such as ToF – according to relevant data, ST is the world’s No. 1 manufacturer of highly integrated ToF modules, which has reached the milestone of shipping 1 billion ToF sensor modules. In addition, ST is also the third largest MEMS manufacturer, which allows them to make a big impact in the industrial sector. With its achievements in the sensor business and MEMS, ST is highly competitive in both the automotive and industrial sensor segments.

The advance of the European semiconductor triumvirate
The advance of the European semiconductor triumvirate

NXP Semiconductors (NXP), another representative of European semiconductor companies, is able to provide high-performance mixed-signal and standard product solutions with its leading expertise in RF, analog, power management, interface, security and digital processing. NXP Semiconductors is currently focused on four main market segments: automotive electronics, industrial & IoT, cell phones, and communications & infrastructure.

According to NXP’s financial results for the first quarter of 2021 ending April 4, 2021, during the quarter, by business, its automotive business generated revenue of $1.229 billion; its industrial & IoT business generated revenue of $571 million; its mobile devices business generated revenue of $346 million; and its communications infrastructure and other business generated revenue of $421 million. Among them, the automotive business was the mainstay of its revenue.

The advance of the European semiconductor triumvirate

(NXP’s gross profit in the first quarter of fiscal year 2021)

In terms of industry position, NXP focuses on in-vehicle communication and RF chip modules, and since NXP acquired Freescale in 2015, its market share in automotive semiconductors has increased to 14.4%, making it the largest supplier in the automotive semiconductor industry (it was not until 2020, when Infineon acquired Cypress, that NXP gave up the number one position in automotive semiconductors). In addition, the industrial sector as the second largest source of revenue for NXP, which also has a strong competitive power among this field.

Another point worth noting is the performance of Infineon, STMicroelectronics and NXP in terms of gross profit situation, which is also an important factor for them to consolidate their dominance in the segment.

Above the cornerstone, the new competition
European semiconductor manufacturers in the past development process, in the automotive and industrial fields such as the accumulation of advantages. And in the new round of technology iteration, around the third generation of semiconductor development in the automotive and industrial areas of the competition has entered the second half.

In January 2015, Infineon completed the acquisition of International Rectifier (USA), integrating advanced technologies in the field of third-generation compound semiconductors (i.e. gallium nitride). 2018, Infineon also acquired the Dresden-based startup Siltectra GmbH. Siltectra has developed Cold Split, an innovative technology that enables efficient handling of crystalline materials and minimizes material loss. Infineon will use Cold Split technology to cut silicon carbide (SiC) wafers, doubling the number of chips that can be produced from a single wafer.

In 2019 STMicroelectronics signed a contract with Cree for the purchase of over $500 million in SiC wafers, and also completed the overall acquisition of Norstel AB (Norstel), a Swedish silicon carbide (SiC) wafer manufacturer that produces 150mm SiC bare wafers and epitaxial wafers. In GaN, last year ST signed a majority acquisition agreement with French GaN innovator Exagan, whose epitaxy process, product development and application experience will broaden and advance ST’s development plans and business in GaN for automotive, industrial and consumer power applications. In the same year, ST joined hands with TSMC in order to accelerate the development of gallium nitride (GaN) process technology and the supply of GaN discrete and integrated devices. Through this partnership, ST’s innovative and strategic GaN products will be manufactured using TSMC’s industry-leading GaN process, the company said in an official press release.

Benefiting from the characteristics of third-generation semiconductors, this material is also widely used in RF devices. At the same time, driven by the new scenario, RF devices also usher in new development opportunities, and European semiconductor manufacturers also smell this opportunity.

From ST’s actions, its three major acquisitions in 2020 are focused on wireless product lines, including the acquisition of SOMOS, ultra-wideband (UWB) technology company BeSpoon, and Riot Micro’s cellular IoT connectivity assets. In the same year, STMicroelectronics also joined the UWB Alliance. ST has said that the integration of UWB, a key secure positioning technology, into the STM32 product portfolio can be applied to IoT, automotive and mobile applications, enabling services such as secure access and accurate indoor and outdoor mapping.

Also in the RF space is NXP, which in May 2019 announced the acquisition of Marvell’s wireless connectivity business for $1.76 billion, involving a major product line of Marvell’s connectivity products such as Wi-Fi and Bluetooth. nXP made this acquisition primarily to complement its wireless communications strength in the industrial and automotive sectors.

Unlike STMicroelectronics and NXP, Infineon sold its RF power business to Cree for 345 million euros (this year, Cree announced that it would officially change its name to Wolfspeed by the end of 2021) after its planned acquisition of Cree’s Wolfspeed power and RF division was terminated, and Infineon went from buyer to seller. Commenting on the deal, Infineon CEO Reinhard Ploss said: “Cree is a quality buyer of Infineon’s RF business and has a high reputation in the industry. We are excited about the idea and the prospect of combining the businesses. At the same time, having spun off the business, we will be able to focus our resources more effectively on Infineon’s strategic growth areas and will retain a strong technology portfolio for the wireless market.”

A new landscape for European semiconductor manufacturers
The emergence of new scenarios has driven new technology developments, and while generating new competition, it has also led these vendors to re-examine their strategic layout, especially for European vendors focusing on niche areas.

In the case of Infineon, in last year’s Infineon Automotive Electronics Developer Conference media communication meeting, Infineon Technologies Greater China senior vice president and head of the automotive electronics business unit Cao Yanfei has introduced, after Infineon’s acquisition of Cypress, the two companies will maximize synergies, through the three major areas of new energy vehicles, autonomous driving and automotive comfort configuration continue to make efforts to promote “New Infineon” to achieve “1+1>2”.

In addition, Infineon announced its latest investment plan in China at the 3rd China International Import Expo last year, when the company decided to expand its IGBT module production line at its Wuxi plant. After the expansion, the Wuxi plant will become one of Infineon’s largest IGBT production bases. According to a report in the Daily Economic News, Infineon Technologies COO Jochen Hanebeck said: “China occupies a strategically important position in Infineon’s global business. The upgrade and expansion of the Wuxi plant will not only further increase our production capacity in China, but will also help Infineon to consolidate its leading position in the development of the global IGBT business.”

ST’s strategy for the automotive market remains unchanged, including the continued expansion of ST’s automotive electrification program, leveraging silicon carbide, IGBTs, microcontrollers and smart power solutions, as well as increased investment in gallium nitride materials. On the whole, according to Jerome Roux, ST’s executive vice president of marketing for Asia Pacific, ST will selectively position itself in the personal electronics, communication devices, computers and peripherals markets, leveraging its custom design business model and unique core competencies.

Meanwhile, according to iawbs, ST also emphasized that China is one of ST’s most important markets and ST is leveraging its broad product portfolio and ecosystem to consolidate its market leadership in the country. Going forward, ST will offer a wide range of applications and customized semiconductor solutions to meet the needs of its global customer base, which includes many increasingly innovative Chinese customer needs.

From NXP’s side, according to a previous report by Semiconductor Industry Insight, Steve Owen, executive vice president of global sales and marketing at NXP, has said that NXP currently has a layout for smart cockpits, autonomous and assisted driving and in-vehicle networks in automobiles, while the company’s partners have expanded from traditional OEMs and Tier 1 suppliers to emerging The company’s partners have also expanded from traditional OEMs and Tier 1 suppliers to the emerging car-making forces.

In terms of overall layout, NXP’s current business focus includes digital instrument clusters, battery management systems and radar systems in automotive, edge processing for secure connectivity in industrial and IoT, ultra-broadband combined with security and software in mobile devices, and a portfolio of products including millimeter wave technology for 5G base stations in communications infrastructure.

Write at the end
From the recent news revealed in the market, European semiconductor manufacturers are not enthusiastic about the semiconductor alliance to be established by the EU. The reason for this is that the projects involved in the plan are not in the blueprint of their company planning. From their layout, they will also focus on their strong areas of development in the future, in order to expand their influence in the semiconductor industry.

In particular, the development of automotive semiconductors is favored by the industry, often seen as the next to stir the semiconductor landscape in the background, in this field has decades of accumulation of European semiconductor manufacturers have actually occupied a congenital advantage. On the other hand, as IDM manufacturers of European semiconductor giants, in the absence of chip manufacturing elbow, their strength in the future is not to be underestimated.

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