How did ON Semiconductor respond to the shortages and epidemics in 2020?
Latest update time：2020-12-27
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"2020 is an unexpected year for everyone. Looking at the global economic situation, the GDP growth rate in 2020 is expected to drop from 2.8% in 2019 to negative 3.7%. China will be the only major economy in the world to achieve positive growth in 2020, while other economies are expected to decline in single digits this year," said senior vice president of strategy, marketing and solution engineering at ON Semiconductor.
At the beginning of 2020, the Asia-Pacific economy first began to decline, and then in the second quarter, the European and American economies fell sharply. In the second half of the year, the world's major economies rebounded strongly and are expected to bring the world back on track. As shown by the PMI (Purchasing Managers Index), manufacturing activities in all major economies are recovering in the second half of the year, with the only exception being Japan, but Japan is also on a positive trend. ON Semiconductor predicts that compared with this year, the economic outlook for next year is optimistic and will improve significantly, and it is generally believed that there will be an overall GDP growth of about 5% in 2021.
Epidemic in the first half of the year, shortage in the second half
In 2020, all terminal markets related to the electronics industry declined, with the only exception being the computing sector. Affected by the epidemic, people have the need to work and study from home, and the computing equipment required for remote work, education, entertainment, etc. has increased, especially laptops. In addition, the servers used in data centers that support remote activities have also increased.
The hardest hit industry was the automotive industry. As the economy shrank, the production and sales of automobiles in the Asia-Pacific region fell sharply. They began to rebound in April of the second quarter, but the subsequent closure of factories in Europe and the United States also led to a sharp decline in production and sales. In the second half of the year, global automobile production and sales recovered, showing a strong V-shaped recovery trend, and are expected to fall by 15% to 17% for the whole year.
On the one hand, the epidemic has caused a recent impact on the global economy, and on the other hand, it has further strengthened some important trends in the electronics market. For example, computing platforms have achieved growth, and in order to support the growth of computing platforms and e-commerce, there is also a stronger demand for data centers. Another important trend is the development of communications, which is reflected in the accelerated development of 5G infrastructure and smartphones, because these are the technologies and equipment required for remote work, life, etc. to achieve communication. As companies and factories are committed to reducing personnel risks, whether in factories, buildings, or homes, investment in automation has been strengthened. It is expected that in the next three to four years, the automotive industry and communication terminal markets will resume growth, while the computing platform market will remain flat, and consumption will follow the overall economic trend.
Regarding the shortage problem currently faced by the entire industry, David Somo believes that the current so-called shortage phenomenon may be due to the sharp decline in supply in the first half of the year and the unexpected sharp rebound in the second half of the year. In other words, many companies stopped placing orders at the beginning, and then placed large orders to support the later growth demand. This situation may lead to the current shortage.
ON Semiconductor is also planning to expand its production capacity, including purchasing a majority stake in Fujitsu's 8-inch wafer fab in Aizuwakamatsu, Japan, and acquiring a 12-inch wafer fab in East Fishkill, New York, USA. Both factories are expanding their production capacity to meet growing demand, which is expected to continue until 2021.
"80% of our components are produced by our factories, and from an ATO (assembly to order) perspective, the proportion is 70%. We are working with manufacturing and packaging and testing partners to continuously increase production capacity and provide supply to our customers," added David Somo.
“Both internal and external improvement” makes ON Semiconductor more competitive
According to HIS statistics, ON Semiconductor ranked second after Infineon with a market share of about 9% in 2018. ON Semiconductor's ranking in integrated device manufacturing is also rising. According to Informa CLT, ON Semiconductor ranked 13th in the world in 2019 with a market share of 1.3%.
To reach its current position, ON Semiconductor has relied on two main lines of growth: endogenous and exogenous. On the one hand, ON Semiconductor achieves endogenous growth through R&D and manufacturing. While manufacturing semiconductor devices, the company also realizes that there is an increasing demand to provide customers with complete system solutions to increase added value. On the other hand, since the company was founded in 2000, ON Semiconductor has achieved exogenous growth through a series of strategic mergers and acquisitions. With recent mergers and acquisitions, ON Semiconductor has been able to build a product portfolio in key areas. For example, the acquisition of Quantenna has further expanded the company's capabilities in Wi-Fi connectivity.
According to David Somo, in order to build a wider portfolio of sensor products to serve the industrial and automotive markets, we have made multiple acquisitions. Recently, we acquired sensL to acquire solid-state LiDAR technology. In addition, the acquisition of IBM is mainly for radar. Prior to this, we made three acquisitions, including Aptina, Cypress's image sensing technology and Truesense, to enrich our image sensor portfolio.
"ON Semiconductor used to manufacture low and medium voltage products, and our acquisition of Fairchild Semiconductor's related businesses further enriched our medium and high voltage power semiconductor products and modules and strengthened our power solutions portfolio. In the future, we will continue to conduct strategic mergers and acquisitions to enrich our product portfolio and accelerate financial performance." David Somo further added.
With its innovative product development capabilities, ON Semiconductor has won numerous awards in the industry. At the same time, it has also made proud achievements in environmental, social and governance, such as being included in the Dow Jones Sustainability Index, being listed on the Bloomberg Gender Equality Index, and being named one of the world's most ethical companies for five consecutive years.
Betting big on the auto market
ON Semiconductor has a long history of providing automotive-grade products for more than 50 years in the field of automotive semiconductors. Since 2010, ON Semiconductor has delivered a total of 130 billion devices to automotive customers. In 2019, more than 230 ON Semiconductor devices were used in every car produced worldwide. A strong embedded quality culture drives the realization of zero defects, and its device quality is measured by the number of defects per billion devices. ON Semiconductor has a leading position in key technologies for automotive systems such as image sensors, ultrasonic sensor interfaces, power modules and discrete ignition IGBTs.
"For high-growth application scenarios in the automotive industry, such as new energy vehicles, we have a complete product portfolio, including silicon, silicon carbide devices, discrete IGBTs, MOSFETs and intelligent power modules to support the different development needs of electric vehicles." David Somo pointed out that ON Semiconductor also maintains close cooperation with Chinese customers in areas and applications such as traction inverters, on-board chargers, high-voltage loads and 48V power-based systems to promote the development of the next generation of new energy vehicles.
In addition, ON Semiconductor saves lives every year. Road traffic accidents kill 1.35 million people every year. In the future, the development of advanced driver assistance systems (ADAS) and L4 and L5 autonomous vehicles will aim to reduce or avoid these casualties. Based on the number of image sensors used in cars by ON Semiconductor, it can save about 81,000 lives per year, or 9 lives per hour.
ON Semiconductor has developed a complete portfolio of product solutions and various sensor modes to support L4 and L5 autonomous vehicles, including technologies such as ultrasonic sensor interfaces, image sensors, solid-state LiDAR and millimeter wave radar.
ON Semiconductor has set the industry standard in the field of automotive image sensors. To date, ON Semiconductor has shipped more than 120 million image sensors to advanced driver assistance systems (ADAS) applications. Over the past 13 years, more than 400 million ON Semiconductor automotive image sensors have been on the road.
In order to save energy and reduce emissions, reduce air pollution, and switch from fuel vehicles to new energy vehicles, there is a demand for electric vehicle charging piles, and ON Semiconductor's silicon and silicon carbide power discrete devices and modules can support the construction of electric vehicle charging piles. "Similarly, our power supply technology, such as solar inverters for solar panels, can enable clean energy generation. ON Semiconductor is fortunate to join forces with Chinese customers in these technical fields to develop related applications." David Somo said.
In recent years, many power semiconductor manufacturers have emerged in China. Faced with this trend, ON Semiconductor believes that in order to win in the increasingly competitive market, it needs to do two things:
First, we must increase investment in research and development and surpass our competitors in innovation by developing products with the highest energy efficiency and competitive costs. The most prominent ones here are MOSFET, IGBT and diodes among power semiconductors.
Second, ON Semiconductor's competitive advantage is also reflected in its packaging capabilities. The company's power products include both discrete products and packaged success modules to meet a variety of application needs, including single-sided direct cooling and dual-sided cooling packaging.
Conclusion
2020 has come to an end. In this extraordinary year, semiconductor companies have been working hard to move forward. Looking forward to next year, we hope to get out of the shadow of the epidemic as soon as possible and create a better business environment for the semiconductor industry. In the new year, ON Semiconductor will continue to realize its vision and become a reliable supplier of power, analog, sensor and connectivity solutions to promote the innovation of energy-efficient electronics.
*Disclaimer: This article is originally written by the author. The content of the article is the author's personal opinion. Semiconductor Industry Observer reprints it only to convey a different point of view. It does not mean that Semiconductor Industry Observer agrees or supports this point of view. If you have any objections, please contact Semiconductor Industry Observer.
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