It’s often the case that a handful of customers drive the growth of a company in a particular market or application. For STMicroelectronics, success in automotive and consumer electronics hinges on two key customers: Tesla and Apple.
In this article, Yole Développement’s imaging, compound semiconductor and power electronics teams provide a snapshot of the company’s penetration and success in these two areas, based on its power devices and image sensors.
Automotive and eMobility
For STMicroelectronics and Tesla, it has always been about silicon carbide (SiC). Back in 2018, Tesla became the first premium car manufacturer to integrate a full SiC power module to the traction motor of its Model 3. At the time, a tear-down from System Plus Consulting revealed the small, high power density, inverter power module contained ST Microelectronics’ SiC MOSFETs – the future of both STMicroelectronics and SiC in electric vehicles were sealed.
Since this discovery, the market for SiC in automotive products has grown. Tesla’s adoption of the SiC traction inverter signalled to electric and hybrid vehicle auto-makers that the technology could be used in the safety-critical traction inverters, where device reliability is key. And today, OEMs across the world are busy developing SiC solutions for this e-mobility market.
For STMicroelectronics, this spells good news as it manufactures modules for the key electrical blocks in a vehicle, including traction inverters, onboard chargers and DC to DC converters. However, proving its traction inverter technology with Tesla remains pivotal to its success.
Relative to onboard chargers and DC to DC converters, traction inverters are the highest value e-mobility market segment with the largest growth potential. These critical main inverters contain the most SiC MOSFETs, command the biggest revenues from device sales and are required in all electric and hybrid electric vehicles. In contrast, the onboard charger is only used in plug-in hybrid electric (PHEVs) and battery electric vehicles (BEVs), whereas DC/DC concerns lower power conversion (lower component content).
Largely thanks to Tesla, STMicroelectronics has a firm foothold in the burgeoning e-mobility market segment and is today’s power SiC device market leader. Its partnership with the Renault-Nissan-Mitsubishi Alliance for on-board chargers has helped to bolster its position while more recent deal with Chinese BYD has also fuelled Q4 figures. In parallel, Yole Développement (Yole) analyses indicates STMicroelectronics to remain Tesla’s number one supplier.
But what about SiC capacity constraints? It is no secret that businesses, including Cree, Rohm, Infineon Technologies, ON Semiconductor, Mitsubishi Electric, and STMicroelectronics, have been grappling with six-inch wafer supply, with shortages threatening margins and revenue.
Many industry actors, including STMicroelectronics, saw this coming, expanding capacity and striking long-term supply agreements to fill the gap. In December 2019, STMicroelectronics also acquired Swedish SiC wafer manufacturer Norstel. With Norstel, STMicroelectronics intends to strengthen its internal SiC wafer supply while removing its reliance on external wafer sources – indeed, STMicroelectronics now plans to address more than 40% of internal production by 2024. What’s more, R&D on 8-inch wafers is also underway, placing the company in a strong position for the industry transition to larger wafers that lies ahead.
Apple wins for 5G mobile and consumer
Clearly STMicroelectronics’ relationship with Tesla and its solid auto-industry strategy are paying off. However, the company’s financial results are also heavily bolstered by Apple.
Although a little-known player in CMOS image sensors (CIS), STMicroelectronics held 6% of revenue in this $19.3 billion market in 2019, which is expected to grow to at least $20 billion in 2020. Its 6% CIS market slice delivered the company to fourth place in an industry dominated by Sony and Samsung, which together occupied just over 60% market share in 2019. Meanwhile, CMOS image sensor manufacturer, OmniVision Technologies, took third place with 10% of the market.
STMicroelectronics’ strength in the CIS market is closely linked to 3D imaging and sensing in Apple platforms. Back in 2017, STMicroelectronics seized several sockets in the Apple iPhone X with its near-infrared (NIR) image sensor for the truedepth structured light camera and a Time of Flight (ToF) proximity detector also featuring a flood illuminator.
Fast-forward to today and STMicroelectronics is providing ToF proximity detectors and NIR CMOS image sensors to much of Apple’s iPhone 12 line-up, undoubtedly driving sales across Q3 2020.
What’s more, following a bottleneck in supply, production of Apple’s smartphones partially shifted to Q4, which was expected to fire up STMicroelectronics revenues in the last quarter.
But it is not all about Apple. STMicroelectronics’ multi-zone ToF detectors also feature in the recently released Samsung Galaxy S21 smartphone, buoying revenues. And unlike US players, the company has not suffered so much from the Huawei trade bans, with a recent licence to build devices for the beleaguered Chinese multinational holding potential for future production here.
Still, a key threat looms – capacity. Likely thanks to its ample manufacturing capacity, Sony’s direct ToF image sensor was recently integrated to Apple’s iPad Pro and the latest iPhone 12 series. More Sony sensors are expected to be integrated in future Apple devices.
While STMicroelectronics continues to secure more foundry space for many of its systems, Yole has yet to see it take this strategy with its CIS products – and this could limit future opportunities in the CIS market. Still, with its strong Q4 2020 results, what comes afterwards?
Only time will tell if STMicroelectronics will win more Tesla and Apple deals, but without a doubt its revenue dynamics will remain inextricably entwined with these industry leaders for many quarters yet.
Pierre Cambou MSc, MBA, is a principal analyst in the photonics and sensing division at Yole Développement (Yole). He is dedicated to imaging related activities by providing market & technology analyses along with strategy consulting services to semiconductor companies. At Yole, Pierre is responsible for the CIS Quarterly Market Monitor, and has authored more than 15 Yole Market & Technology reports. Pierre has an Engineering degree from Université de Technologie de Compiègne (France) and a Master of Science from Virginia Tech. (VA, USA). Pierre also graduated with an MBA from Grenoble Ecole de Management (France).
Ezgi Dogmus, PhD. is team lead analyst in compound semiconductor & emerging substrates activity within the power & wireless division at Yole. She manages the expansion of the technical expertise and the market know-how of the company. In addition, Ezgi actively assists and supports the development of dedicated market & technology reports, as well as custom consulting projects. After graduating from University of Augsburg (Germany) and Grenoble Institute of Technology (France), Ezgi received her PhD. in Microelectronics at IEMN (France).
Milan Rosina, PhD, is principal analyst, power electronics and batteries, at Yole, within the power & wireless division. He is engaged in the development of the market, technology and strategic analyses dedicated to innovative materials, devices and systems. His main areas of interest are EV/HEV, renewable energy, power electronic packaging and batteries. He received his PhD degree from Grenoble Institute of Technology (Grenoble INP) in France.
Ana Villamor, PhD serves as a technology & market analyst, power electronics & compound semiconductors within the power & wireless division at Yole. She is involved in many custom studies and reports focused on emerging power electronics technologies at Yole, including device technology and reliability analysis (MOSFET, IGBT, HEMT, etc). She holds an Electronics Engineering degree completed by a Master and PhD. in micro and nano electronics from Universitat Autonoma de Barcelona (SP).