Commodities Analyzed: The Evolution of Discrete Devices

Welcome to the Commodities Analyzed series! In this series, we take a deeper look at data and analysis from Supplyframe Commodity IQ’s recent mid-quarter 2023 summary, looking at what users can expect and learn from the information available.

In this article, we look at capacitors, offering a combination of real-world data, deep expert analysis, and a better understanding of how critical metrics like lead times, pricing, and availability will shift for this commodity in 2023.

Discrete Semiconductors Overview 

Before the dawn of the integrated circuit (IC) era, all electronic components were standalone or discrete devices. But the world changed 65 years ago, on September 12, 1958, when Jack Kilby demonstrated the first working integrated circuit to his colleagues at Texas Instruments, and transistors and diodes are commonly referred to as the main categories of discrete semiconductors or ICs. 

 This article focuses on the evolution of market trends for power metal-oxide semiconductor field-effect transistors (MOSFETs), transistors, and diodes. 

The Power of MOSFETS

Transistors and power transistors are perhaps the most important class of discrete semiconductors devices, as they are used in various applications to regulate voltage, lower power consumption, and reduce heat generation.

MOSFETs are designed to handle significant power levels. Compared to other power semiconductor devices, such as the insulated-gate bipolar transistor (IGBT) and thyristor, MOSFETs have the advantage of high switching speeds and efficiency at low voltages. It shares with the IGBT an isolated gate that makes driving easy. They can be subject to low gain, sometimes to the degree that the gate voltage needs to be higher than the voltage under control.

Power MOSFETs were made possible by the evolution of early generations of MOSFETs and CMOS technology, which have been used for ICs since the 1960s. The power MOSFET shares its operating principle with its low-power counterpart, the lateral MOSFET. The power MOSFET has been adapted from the standard MOSFET, which has been commonly used in power electronics since the 1970s, over 50 years ago.

The power MOSFET is the world’s most common power semiconductor device due to its low gate drive power, fast switching speed, advanced paralleling capability, wide bandwidth, ruggedness, easy drive, simple biasing, ease of application, and ease of repair. In particular, it is the most widely used low-voltage switch, operating at less than 200 volts. It can be found in various applications, including power supplies, DC-to-DC converters, low-voltage motor controllers, and other applications.

Diode Details

Diodes conduct current primarily in one direction and are employed to perform myriad functions, including voltage conversion and reference, temperature indication, and surge protection.

An ideal diode should have the following characteristics:

• When forward-biased, the voltage across the end terminals of the diode should be zero, no matter the current that flows through it (on-state).
• When reverse-biased, the leakage current should be zero, no matter the voltage (off-state).
• The transition (or commutation) between the on-state and the off-state should be instantaneous.

In reality, the design of a diode is a trade-off between performance in on-state, off-state, and commutation. Indeed, the same area of the device must sustain the blocking voltage in the off-state and allow current flow in the on-state; as the requirements for the two states are opposite, a diode has to be either optimized for one of them or time must be allowed to switch from one state to the other (i.e., the commutation speed must be reduced).

These trade-offs are the same for all power devices. For instance, a Schottky diode has excellent switching speed and on-state performance but a high level of leakage current in the off-state. On the other hand, a PIN diode is commercially available in different commutation speeds (what are called “fast” and “ultrafast” rectifiers). Still, any rate increase is necessarily associated with lower performance in the on-state.

An Uneven Segment and Pace of Demand 

As with other electronic components, discrete IC demand from the PC, consumer electronics, and handset markets has slowed, while sales to automotive, industrial, and medical segments remain robust.

The pace of growth for diode demand is slowing, with the Supplyframe Commodity IQ Demand Index for diodes plunging by 31.9% year-on-year in the first half. Despite this, the magnitude of the decline is set to decelerate, with a 10.3% sequential demand decline in Q2 easing to a 6.2% decrease in Q3 2023.

Demand for transistors – including MOSFETs and IGBTs –  is also in decline, albeit at a decelerating rate, with the index set to ease by 4.4% sequentially in Q3, compared to a 22.5% drop in Q2 2023. Yet for automotive-grade transistors, some supply constraints endure. For example, booming demand for silicon-carbide (SiC) MOSFETs and insufficient capacity through 2024 will translate into shortages starting in H2 2023.

Pricing for some high-demand transistors has fallen but as an overall electronic component category, transistor pricing through June 2023 remained at nearly two times the Commodity IQ Price Index baseline, and power MOSFETs are forecast to rise to three times the baseline.. Competition between manufacturers for in-demand products is expected to remain intense for the foreseeable future.

Consequently, major OEMs, IC design houses, and other firms are shifting portions of their orders to foundries outside China. For example, leading semiconductor equipment provider Applied Materials plans to invest up to $4 billion in a semiconductor research facility in the U.S., thanks to the CHIPS and Science Act. 

Of course, it’s not going to happen quickly. The planning will take seven years and is expected to create 2,000 engineering jobs, thanks to expanding domestic semiconductor production. For example, Applied Materials plans to focus on upstream research, not manufacturing. The company says the local tech talent from nearby universities will provide innovative ideas.  

Taiwanese semiconductor foundries UMC and Vanguard are expected to increase the capacity utilization of 8-inch wafer production for MOSFETs, and component manufacturers like STMicroelectronics are investing in 8-inch SiC capacity to support the production of IGBTs and MOSFETs for the automotive market. Still, power MOSFET availability challenges are expected to live on. 

While overall transistor lead times shrank by 14.2% year-over-year in H1 2023, power MOSFET will remain elevated into 2024, according to the Supplyframe Commodity IQ Lead Time Index. Apart from MOSFETs, most discrete IC lead times are easing but are expected to remain elevated for at least another six months until capacity balances supply.