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The attack of the European semiconductor giants: how strong are they?

At the end of last year, the 17 EU countries announced that they would invest 145 billion euros (about 1.2 trillion yuan) in the next two to three years to promote EU countries to jointly research and invest in advanced processors and other semiconductor technologies.

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

How strong are the traditional top three in Europe?

According to the sales of the world’s top 15 semiconductor companies in the first quarter of 2021 released by ICinsights, Infineon and ST are the European semiconductor manufacturers shortlisted for this list, ranking 12th and 14th respectively. The report further emphasizes that if pure-play fab TSMC is excluded, then Netherlands-based NXP will also make the list. According to the report, in Q1 2021, NXP’s revenue will be $2.503 billion.

The attack of the European semiconductor giants: how strong are they?

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

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

The cornerstone of the position of European semiconductor manufacturers

As one of the early development areas of the semiconductor industry, Europe regards the two market segments of automotive semiconductors and industrial semiconductors as the key directions for its development of the semiconductor industry. On this basis, Europe has also nurtured giants in automotive semiconductors and industrial semiconductors, which is also the cornerstone of the European semiconductor companies’ ability to make the list.

Specifically, Infineon has four business divisions, namely 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 businesses related to automotive Electronic semiconductors. The Industrial Power Control segment focuses on power semiconductors primarily for industrial applications, while the Power and Sensor Systems segment focuses on consumer-facing applications and power supplies. Activities related to classic and new security applications are combined in the “Connected Security Systems” section.

According to Infineon’s financial report for the second quarter of the 2021 fiscal year ended March 31, 2021, the company’s revenue in the quarter reached 2.7 billion euros, with a gross profit margin of 36.0%.

The attack of the European semiconductor giants: how strong are they?

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

From the perspective of business division, Infineon’s ATV division has revenue of 1.219 billion euros in the second quarter, and this division is also the largest source of Infineon’s revenue. They occupy an industry-leading position in various segments of automotive semiconductors, including automotive power devices and power supply devices. In addition, in terms of industrial control, Infineon also occupies the first position in the industry in many fields.

The attack of the European semiconductor giants: how strong are they?

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

The attack of the European semiconductor giants: how strong are they?

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

From the standpoint of STMicroelectronics, the company is divided into three divisions by product: Automotive and Discrete Products (ADG), Analog, MEMS and Sensors (AMS), and Microcontrollers and Digital ICs (MDG). ).

According to the financial report released by STMicroelectronics as of the first quarter of fiscal year 2021, the net revenue in the first quarter was US$3.016 billion, a year-on-year increase of 35.2%, and the gross profit margin was 39.0%. In terms of business division, the net revenue of the ADG business was US$1.043 billion, accounting for 35% of the company’s total revenue; the net revenue of the AMS business was US$1.083 billion, accounting for 36% of the company’s total revenue; the net revenue of the MDG business was 886 million. US dollars, accounting for 29% of the company’s total revenue.

The attack of the European semiconductor giants: how strong are they?

(Gross profit of STMicroelectronics in the first quarter of fiscal 2021) (Gross profit of STMicroelectronics in the first quarter of fiscal 2021)

From the perspective of market position, according to the 2020 global MCU market review and 2021 market outlook report released by Morgan Stanley, STMicroelectronics occupies a dominant position in the 32-bit MCU market. STMicroelectronics also has a good performance in ToF and other fields. According to relevant data, STMicroelectronics is the world’s largest manufacturer of highly integrated ToF modules, and it has reached the milestone of 1 billion ToF sensor modules shipped. In addition, STMicroelectronics is still the third-ranked MEMS manufacturer, which allows them to flex their muscles in the industrial field. With its achievements in the sensor business and MEMS field, STMicroelectronics has strong competitiveness in the fields of automotive and industrial sensors.

The attack of the European semiconductor giants: how strong are they?

The attack of the European semiconductor giants: how strong are they?

Another representative of European semiconductor companies, NXP Semiconductors (NXP), can provide high-performance mixed-signal and standard product solutions with its leading expertise in RF, analog, power management, interface, security and digital processing. At present, NXP Semiconductors mainly focuses on four major markets: automotive electronics, industrial & IoT, mobile phones, communications & infrastructure.

According to NXP’s financial report for the first quarter of 2021 as of April 4, 2021, in this quarter, by business, its automotive business revenue was $1.229 billion; industrial and IoT business revenue was $571 million; Mobile devices revenue was $346 million; communications infrastructure and other revenue was $421 million. Among them, the automobile business is the main force of its revenue.

The attack of the European semiconductor giants: how strong are they?

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

From the perspective of industry status, NXP mainly focuses on in-vehicle communication and RF chip modules. Since NXP acquired Freescale in 2015, its market share in automotive semiconductors has increased to 14.4%, becoming the largest supplier in the automotive semiconductor industry (until 2020). In 2008, after Infineon acquired Cypress, NXP gave up its first position in automotive semiconductors). In addition, the industrial field, as NXP’s second largest source of income, also has strong competitiveness in this field.

In addition, it is worth noting that the performance of Infineon, STMicroelectronics and NXP in terms of gross profit is also an important factor for them to consolidate their dominance in the segment.

Above the cornerstone, new competition

In the process of development in the past, European semiconductor manufacturers have accumulated advantages in the fields of automobile and industry. In the new round of technological iterations, the competition in the automotive and industrial fields surrounding the development of third-generation semiconductors has also entered the second half.

In January 2015, Infineon completed the acquisition of International Rectifier in the United States, integrating advanced technologies in the field of third-generation compound semiconductors (ie, gallium nitride). In 2018, Infineon acquired the Dresden-based start-up Siltectra GmbH. Siltectra has developed an innovative technology called Cold Split, which processes crystalline materials efficiently and minimizes material loss. Infineon will use cold dicing technology to cut silicon carbide (SiC) wafers, doubling the number of chips that can be produced from a single wafer.

In 2019, STMicroelectronics and Cree signed a SiC wafer purchase contract of over US$500 million, and also completed the overall acquisition of Swedish silicon carbide (SiC) wafer manufacturer Norstel AB (Norstel), which produces 150mm SiC bare wafers and epitaxy wafer. In terms of gallium nitride, last year, STMicroelectronics and the French gallium nitride innovator Exagan signed a majority stake merger agreement. Exagan’s epitaxy process, product development and application experience will broaden and advance ST’s automotive, industrial and consumer power GaN development programs and businesses. In the same year, STMicroelectronics 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. It said in an official press release that through this cooperation, STMicroelectronics’ innovative strategic gallium nitride products will use TSMC’s industry-leading GaN manufacturing process.

Benefiting from the characteristics of third-generation semiconductors, this material is also widely used in radio frequency devices. At the same time, driven by new scenarios, radio frequency devices have also ushered in new development opportunities, and European semiconductor manufacturers also sense this opportunity.

From the perspective of STMicroelectronics’ 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. STMicroelectronics has said that integrating UWB, a key secure positioning technology, into the STM32 product portfolio can be applied to IoT, automotive and mobile communication application scenarios to achieve services such as secure access, accurate indoor and outdoor mapping.

NXP also has a layout in the RF field. In May 2019, NXP announced the acquisition of Marvell’s wireless connectivity business for $1.76 billion. The main product lines involved are Marvell’s Wi-Fi and Bluetooth connectivity products. NXP made this acquisition mainly to strengthen its wireless communication strength in the industrial and automotive fields.

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

The new layout of European semiconductor manufacturers

The emergence of new scenarios has promoted the development of new technologies. While generating new competition, these manufacturers have begun to re-examine their strategic layouts. This is especially true for European manufacturers who focus on subdivisions.

As far as Infineon is concerned, at the media communication meeting of the Infineon Automotive Electronics Developers Conference last year, Cao Yanfei, senior vice president of Infineon Technologies Greater China and head of the automotive electronics business unit, introduced that in Infineon Technologies Inc. After the acquisition of Cypress, the two companies will maximize the synergy effect, and promote the “New Infineon” to achieve “1+1> 2”.

In addition, at the third China International Import Expo last year, Infineon announced its latest investment plan in China, where the company decided to expand the IGBT module production line at its Wuxi factory. After the expansion of the Wuxi plant, it will become one of Infineon’s largest IGBT production bases. According to the Daily Economic News, Jochen Hanebeck, Chief Operating Officer of Infineon Technologies, said: “China occupies an important strategic position in Infineon’s global business. The upgrade and expansion of the Wuxi plant will not only further enhance our presence in China production capacity, and will also help Infineon strengthen its leadership in the development of the global IGBT business.”

ST’s strategy for the automotive market remains unchanged, including expanding ST’s vehicle electrification plans, leveraging silicon carbide, IGBTs, microcontrollers and smart power solutions, and investing in gallium nitride materials. On the whole, according to Jerome Roux, executive vice president of marketing for STMicroelectronics Asia Pacific, STMicroelectronics will selectively deploy in the personal electronics, communication equipment, computer and peripheral markets, leveraging its custom-designed business model and unique core competition force.

At the same time, according to the iawbs report, STMicroelectronics also emphasized that China is one of the most important markets for STMicroelectronics, and STMicroelectronics is using a broad product portfolio and ecosystem to consolidate its domestic market leadership. In the future, ST will provide a variety of applications and customized semiconductor solutions to meet the needs of a global customer base, including many increasingly innovative Chinese customers.

From the perspective of NXP, according to previous reports from Semiconductor Industry Watch, Steve Owen, executive vice president of global sales and marketing at NXP, has said that NXP is currently in the car’s smart cockpit, autonomous driving and assisted driving. As well as in-vehicle network and other aspects, there are layouts, and the company’s partners have also expanded from traditional OEMs and Tier 1 suppliers to emerging car manufacturers.

In terms of overall layout, NXP’s current business focuses include digital instrument panels, battery management systems and radar systems in the automotive field, edge processing for secure connections in the industrial and IoT fields, ultra-wideband and security and software in the field of mobile devices. , as well as a product portfolio in the communications infrastructure sector including 5G base station millimeter wave technology.

write at the end

Judging from the news revealed in the recent market, European semiconductor manufacturers are not keen on the semiconductor alliance that the EU is going to establish. The reason is that the projects involved in the plan are not in their company’s blueprint. Judging from their layout, they will also develop around their strong areas in the future to expand their influence in the semiconductor industry.

In particular, the development of automotive semiconductors is favored by the industry and is often regarded as the next background that can stir up the semiconductor landscape. European semiconductor manufacturers who have accumulated decades of experience in this field have actually occupied an innate advantage. On the other hand, the European semiconductor giants, as IDM manufacturers, will not be underestimated in the future without the support of chip manufacturing.

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