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Lux: strategy is key as more efficient GaN, SiC power electronics enter market; automakers as integrators

Power electronics based on gallium nitride (GaN) and silicon carbide (SiC) have the potential to significantly improve efficiency. However, because these materials are higher-cost, companies need market-specific strategies in order to succeed as these new wide-bandgap (WBG) materials claim market share from silicon-based semiconductors, according to a recent Lux Research report, “Strategic Playbook for Power Electronics: Lessons from the IC Sector Evolution.”

Carmakers would succeed by playing the role of an “integrator,” by vertically integrating upstream in the value chain to power modules, while a GaN or SiC developer would do well to pursue a “technology disruptor” strategy, offering core technology expertise to solar inverter makers and incumbent system integrators like ABB.

Fast-growing markets like automotive and solar inverters are unforgiving when it comes to players without strong business and strategy. Start-ups trying to address these opportunities need to forge partnerships and collaborations—companies like Transphorm and GaN Systems that have done so are best-positioned for success.

—Pallavi Madakasira, Lux Research Analyst, lead author

Lux Research analysts evaluated the value chain in GaN and SiC power electronics to identify strategies for the automotive and solar inverter market. Among their findings:

  • Integrators face low risk. Carmakers could integrate upstream through acquisition to include power modules and inverter/converter manufacturing. Such acquisitions will allow carmakers to own drivetrain design and lower overall costs.

  • Tech differentiation is critical. A vertically integrated GaN/SiC device or module player is well-positioned in the solar value chain. The core technology differentiation that such a company offers will be critical for incumbent solar inverter makers like SMA and Fronius, and something for which system integrators such as ABB do not have the competencies.

  • Other players need to be nimble. Suppliers of substrates, packaging materials and thermal materials will need to customize. Staying nimble and planning for an increased number of specialized device makers in the power electronics value chain will be critical to their overall success.

The report is part of the Lux Research Energy Electronics Intelligence service.

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