01 Mar 2024 -

Power module market to boom, but costs under pressure

ev power supplies

The power module market is poised for significant growth, with revenues expected to double to $16 billion by 2029, representing a 12.1% CAGR between 2023 and 2029, reports Yole Group. However, a hidden battleground is emerging within this growth story, as cost pressures threaten to squeeze margins.

“Today, continuous improvements in module materials and packaging design are needed to take advantage of the benefits of SiC technology,” says Yole’s Shalu Agarwal, “however, the development is simultaneously focused on reducing the costs of power modules through “good enough” performance and reliability.”

Market Growth Driven by Electric Vehicles

The surge in electric vehicle (xEV) adoption is a key driver of this growth. These vehicles require power modules with specific characteristics, creating an opportunity for companies that can fulfill those needs. Leading players in the market hail from established regions like Europe and Japan, with names like Infineon and Mitsubishi Electric at the forefront.

Cost Pressures Mount as Asian Players Enter the Fray

While established players dominate the current landscape, the rise of Asian competitors is putting cost pressures on the entire market. Companies like FLH, a Chinese ceramic substrate manufacturer, are offering lower-cost alternatives, forcing established players to adapt. This has triggered a trend of geographic expansion, with Japanese companies like NGK Insulators setting up production facilities in Europe to stay competitive.

Balancing Performance and Cost: A Delicate Dance

The industry is currently caught in a tug-of-war between high performance and cost optimization. While advancements like silicon carbide (SiC) technology offer superior performance, they also come at a higher cost. Manufacturers are thus exploring ways to achieve “good enough” performance at lower costs. However, achieving this balance requires a deep understanding of the entire ecosystem, from materials and design to manufacturing and integration.

Innovation and Consolidation: The Way Forward

To navigate this complex landscape, companies are focusing on innovation and consolidation. The demand for better thermal management, miniaturization, and reliable materials is pushing the boundaries of technology. Additionally, mergers and acquisitions are expected to occur as companies seek to strengthen their positions in the market.

In conclusion, the power module market is set for exciting growth, fueled by the electric vehicle revolution. However, the fight for market share will be fierce, with cost pressures and the need for innovative solutions playing a decisive role in determining the future landscape.

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