Power management has become an industry staple as the need to switch and convert different voltage levels and concerns about power consumption have increased. But the power management sector, encompassing parts like regulators, rectifiers, and power transistors, has struggled recently as poor market conditions force suppliers to cut prices and refocus their market strategies.
Though a few end markets, such as automotive and consumer electronics, have held up well, at least two industry mainstays--computers and communications--have had a bumpy ride the past two years. Nevertheless, power management product development has continued at a brisk pace as suppliers hope that better performance and package designs capture design-ins that will help them emerge from the industry downturn.
"We see increased design activity, particularly for battery-operated products," said Ed Freeman, product marketing manager for telecommunications peripherals and automotive at STMicroelectronics Inc., Geneva, Switzerland. Freeman noted that demand is especially solid for switching regulators capable of converting 5V operation to 3.3V and lower.
But suppliers say a steady stream of design activity has not yet translated into increased orders.
"The market has been down for two years, making it difficult for anyone to sell products," said Peter Bella-
vigna, marketing manager of the discrete products commodity business unit at Hitachi Semiconductor (America) Inc., San Jose.
According to market research firm iSuppli Corp., El Segundo, Calif., sales of power management devices are expected to rise 8.9% this year compared with 2001, to $14.2 billion. iSuppli believes sales will further improve in 2003, when an 11.1% year-over-year increase will push revenue to about $15.8 billion.
Despite the upward momentum, the market has slumped recently on softening demand from systems makers in the communications infrastructure, wireless and mobile computing, and industrial sectors, noted iSuppli analyst Gary Grandbois.
"The market took off strongly in the first half of this year, but flattened in the second half because of poor PC demand," said Grandbois, who predicts the continuation of flat revenues into 2003, with a gradual pickup after the second quarter.
Automotive, on the other hand, has been a bright spot for suppliers like El Segundo-based International Rectifier Corp., which derives 20% of its revenue from that sector. Although 42V vehicle electrical systems are not expected to ramp up until the middle of the decade, Alex Lidow, International Rectifier's president, said the company has leveraged its advanced semiconductor technology for today's 14V systems.
In November the company began producing an active integrated rectifier/regulator for automotive alternators. The device, which combines a voltage regulator and active rectifier, is being designed into DaimlerChrysler's Maybach luxury vehicle. "A lot of drivers want an integrated starter/alternator," Lidow said.
Like the automotive market, which has remained relatively robust through a proliferation of zero-percent financing deals, continued consumer spending has helped the consumer electronics market maintain steady growth.
"One healthy trend has been the growth of game stations," said Swapen Banerjee, marketing director at Siliconix Inc., Santa Clara, Calif. Banerjee noted that Sony Corp., a Siliconix customer, expects to triple sales of its Playstation gaming line this year, increasing design-ins for Siliconix's power ICs, MOSFETs, and low-dropout regulators.
Despite the strength of a few high-profile end markets, price erosion has been the rule in virtually every area, vendors observed. "Price pressure is still very strong," Hitachi's Bellavigna said. "Everyone has the same capacity; all are after the same pie."
The price of power MOSFETs fell 19% this year and voltage regulators tumbled 22%, according to iSuppli, although bi-polar transistor prices slid only 6% after dropping 34% in 2001.
"Many of the price contracts were negotiated last year," Grandbois said. "It's gotten to the point where it hurts so much that suppliers are walking away from business."
Slow end-market demand is also favoring OEMs by keeping lead times short and inventories of commodity parts abundant. "Lead times for commodity parts remain at four to six weeks, with some specialized parts running at eight to 10 weeks," said Arunjai Mittal, vice president and general manager of power management and supply for the Automotive & Industrial business of Infineon Technologies A.G., Munich, Germany.
But the buyer's market may be moderating somewhat, according to suppliers, who note that pricing and availability do not universally favor OEMs. "Erosion was severe in the past year but has leveled off in the last three to six months," said Steve Ahrens, director of business development and communications for discrete power technologies at Fairchild Semiconductor International Inc., South Portland, Maine.
And the availability of higher-end parts is not necessarily guaranteed, according to Grandbois, who observed that certain newer packages for MOSFETs and some chip-scale packages are in tight supply.
Madhu Rayabhari, strategic marketing director for analog and mixed-signal products at Fairchild Semiconductor, noted that inventories of switching regulators for telecom applications remain at an historically high level. However, he also confirmed that low-dropout regulators rated below 3A, which are used heavily in set-top boxes and televisions, are not abundant.
That scenario may eventually extend to other product areas, given that power IC suppliers, still smarting from the inventory overhang of 2001, are determined not to let stock pile up. In fact, many said they will continue to operate at well below production capacity and are building parts only as needed.
"From our perspective, we don't have much inventory on some of these parts. We build them to order," Fairchild's Rayabhari said.
As they strive to optimize their inventory levels, suppliers of power management devices are also looking over their shoulder at the rise of low-cost Far East vendors, though many Western companies said the impact of Asian manufacturers has yet to be felt.
"There are Far East companies producing bipolar transistors, but their market share is small and I don't see them getting big," said Brach Cox, market development manager for Toshiba America Electronic Components Inc. (TAEC), Irvine, Calif.
Still, most vendors continue to transfer plants and sales offices to China and other low-cost regions to better access the growing customer base there and bring down production costs.
Infineon has moved most of its packaging test and assembly operations to Asia, according to Mittal, while Fairchild Semiconductor opened a packaging design center in Bucheon, South Korea, in September and is building an 800,000-sq.-ft. plant and warehouse in Suzhou, China, that is expected to open in 2004.
National Semiconductor Corp., Santa Clara, is setting up in Suzhou and recently started building a 550,000-sq.-ft. assembly and test facility slated to open in 2004.
One area in which the industry's more well-established power management IC manufacturers claim to have an advantage is new-product development, much of which is being aimed at extending battery life and meeting stringent power management specifications for portable products.
Last month, Siliconix introduced three step-down converter ICs that convert 2.6-6V to as low as 0.4V, enabling portable products to operate on lower voltages and improve run times. Of the three devices, the Si9174 allows output-voltage adjustments from 0.4V up to the input voltage, while the Si9175 and Si9176 have a fixed output of 1.2V.
ON Semiconductor Inc., Phoenix, recently introduced the NCP1203 and NCP1200A, two pulsewidth-modulated controllers that allow designers to meet standby power regulations such as EnergyStar and Blue Angel in consumer electronic and computer peripheral devices. Both controllers have an output drive capability of 250mA and support power levels from 5W to more than 100W.
Power management technology is also advancing to regulate power-hungry microprocessors. Semtech Corp., Camarillo, Calif., last month unveiled a power management chipset that can handle both Intel and Advanced Micro Devices microprocessors, enabling OEMs to reduce their component inventories and simplify board design. The Vcore chipset allows motherboard designers to standardize to a single power solution for any MPU designed to Intel's 10.X VRD and 9.X VRM or AMD's K7 or K8 specifications.
And earlier this month, TAEC introduced a slim-thin flat power MOSFET package that is 60% thinner and requires 30% less board space than D2PAK packages, the company claimed. The packages measure 10.7