PALO ALTO, Calif.--The inventory build-up and downturn has produced manufacturers in the discrete power semiconductor market that are severely restrained by low prices and lack of profits, according to a new report from Frost & Sullivan today (November 25, 2003).
"Maintaining equilibrium between capacity and profitability is a strong challenge facing manufacturers in the mature discrete power semiconductor market," said Vidhya Jayakrishnan, an analyst with the market research firm.
But still, the discrete power semiconductor market is expected to grow from $8.68 billion in 2002, to $10.96 billion by 2006, according to the research firm. The Asian market promises high growth in revenue as spiraling sales of portable and consumer electronics in this region indicate escalating consumer purchasing power.
Declining prices, however, stand in the way of growing revenues. Manufacturers are exploring various strategies to counter the effect of low prices; for instance, many of the larger ones are cutting back on outsourcing costs and focusing instead on insourcing.
Setting up plants in Asia, where labor, production and installation costs are lower, is another major trend seen in this market.
Offering a broader product portfolio is another effective way to tackle price erosion. In fact, as consumers get more demanding about superior functionalities in wireless communication devices and automobiles, manufacturers will either have to flesh out their portfolios or get left behind in the race.
"Attention to these factors to a large extent aids in maintaining a modest profit in the discrete power semiconductor market," said Jayakrishnan.
Continuous improvements in some types of semiconductors such as insulated-gate bipolar transistors (IGBTs) and metal-oxide semiconductor field effect transistors (MOSFETs) are also stimulating the market. Demand for cost-effective IGBTs is particularly growing in applications such as switch mode power supply. "Superior performance combined with affordable prices is helping IGBTs and MOSFETs capture and retain greater market share," he said.