IGBT is highly sought after by the capital market, and A-shares will usher in a wave of listing boom

In recent years, with the accelerated development of new energy vehicles, charging piles, variable frequency home appliances and other industries, the domestic IGBT demand has exploded, and the domestic IGBT market size has shown an accelerating growth trend. However, the IGBT market has been monopolized by a few suppliers such as Infineon, Mitsubishi, Fuji Electric, and ON Semiconductor. The self-sufficiency rate of the domestic power semiconductor market is low, and the self-sufficiency rate of mid-to-high-end power IGBTs is less than 10%. There is huge room for domestic substitution.

Against the backdrop of growing demand for domestic substitution and market applications, the prosperity of power semiconductors such as IGBT continues to improve, related companies in the industry chain are favored by investors, and their stock prices are rising all the way.

At the same time, the domestic power semiconductor industry has also set off a wave of "listing fever". Following China Resources Microelectronics, New Clean Energy, and Star Semiconductor, power semiconductor companies such as Repower Semiconductor, CRRC Electric, Macromicro Technology, East Micro Semiconductor, and Core Micro Electronics have also started their listing journey. At the same time, Sirius Core and Core Energy Semiconductor have also won the favor of major capitals.

Popular in the capital market

As the core device for energy conversion and transmission, IGBT is commonly known as the "heart" of the power electronics industry. It is widely used in new energy vehicles, industrial control, variable frequency home appliances and other fields. Among them, new energy vehicles are one of the fastest growing areas in market demand.

Chen Gang, general manager of BYD Semiconductor, China's largest automotive-grade IGBT manufacturer, said that new energy vehicles have switched from "electrification" in the first half to "intelligence" in the second half, and intelligence has created a huge market increase for automotive-grade semiconductors, driving the incremental demand for diversified semiconductors. "The value of semiconductors per new energy vehicle is twice that of traditional fuel vehicles, and it is increasing year by year. It is now twice, and it may be 10 times in the future."

According to agency forecasts, the domestic market is expected to be driven by the increase in the penetration rate of new energy vehicles. The growth rate of the IGBT market will be in the high growth range of 20%-23% in the next five years, and the global automotive IGBT market will reach US$6 billion by 2025. At the same time, photovoltaic wind power and charging piles are also rapidly driving the demand for IGBT. It is expected that the overall IGBT market will exceed US$10 billion in 2025.

As the demand for IGBT continues to grow, the industry has experienced an imbalance between supply and demand, and the domestic market has even seen a shortage of chips. Since the beginning of 2020, major international IGBT manufacturers and foundries have been affected by the epidemic, and the problem of insufficient production capacity has continued to this day.

A manufacturer said, "IGBT products are definitely in short supply at present, and the company is also increasing investment in production capacity and production lines. However, since the IGBT market has long been monopolized by international giants, there is a clear gap in strength between domestic companies and them. Even though the market space is very large, there is still a long way to go."

According to a previous report by Jiwei.com, due to the impact of the epidemic, manufacturers that originally used imported IGBTs have gradually introduced domestic suppliers such as Star Semiconductor and BYD Semiconductor due to insufficient supply, and signs of domestic substitution have begun to emerge.

Riding on the trend of domestic substitution, IGBT has broad prospects and the capital market has long favored it.

On April 14, BYD announced the reorganization of its wholly-owned subsidiary BYD Semiconductor and plans to introduce strategic investors. Subsequently, BYD Semiconductor completed its A and A+ rounds of financing in May and June 2020, respectively, with a total investment of 2.7 billion yuan and a post-investment valuation of 10.2 billion yuan. Strategic investors include South Korea's SK Group, SMIC, Xiaomi Industrial Fund, Sequoia China, Small and Medium Enterprise Development Fund, CICC Capital, SDIC Innovation, Songhe Capital, Shenzhen Capital Group, Himalaya Capital and other well-known domestic and foreign investment institutions and industrial capital.

In addition, since 2020, more than 10 power semiconductor manufacturers including Xinneng Semiconductor, Basic Semiconductor, Sirius Semiconductor, Lips, and Dongwei Semiconductor have also been favored by the capital market and successfully obtained financing.

Industry insiders said, "Although the global economy is full of instability, capital is enthusiastic about the power semiconductor market, and many power semiconductor companies have obtained financing. It is hoped that my country's power semiconductor industry can develop more rapidly with the help of a large amount of capital."

Driven by the capital market's enthusiasm, the share prices of individual stocks in the power semiconductor sector have also been rising. Silan Microelectronics' share price has risen by more than 70% in the past month, and BYD's share price has also risen by more than 40%. In addition, the share prices of power semiconductor companies such as Star Semiconductor and New Clean Energy have all risen to varying degrees.

Start of the IPO boom

Against the backdrop of hot capital, a booming market and domestic substitution, the power semiconductor industry is ushering in a wave of listing enthusiasm.

Since 2020, power semiconductor companies such as China Resources Microelectronics, Star Semiconductor, and New Clean Energy have successfully landed on the capital market. It is worth mentioning that the listed power semiconductor companies have been highly favored by the capital market and have performed very well. For example, Star Semiconductor, a leading domestic IGBT company that has landed on the main board, has seen its share price soar from 12.74 yuan at the beginning of its listing to 263.20 yuan at the close on January 8, becoming one of the best stocks in the domestic capital market; New Clean Energy's share price has also risen from 19.91 yuan per share at the beginning of its listing to 189.26 yuan per share on January 8.

The outstanding performance of the above-mentioned enterprises has also attracted other power semiconductor manufacturers to speed up their listing. At present, the IPO applications of CRRC Electric, Macromicro Technology, Ruineng Semiconductor and other enterprises have been accepted, and enterprises such as Dongwei Semiconductor, Xinwei Electronics, and Longteng Semiconductor have also entered the listing guidance stage, and BYD Semiconductor has also entered the pre-listing preparations. 

On December 22, 2020, the Shanghai Stock Exchange accepted the listing application of Macromicro Technology on the Science and Technology Innovation Board. It plans to raise 558 million yuan to invest in new power semiconductor device industrial base projects, R&D center construction projects, repayment of bank loans and replenishment of working capital projects.

The application submitted by CRRC Electric, an indirect holding subsidiary of CRRC Corporation Limited, for its A-share IPO and listing on the Science and Technology Innovation Board was accepted by the Shanghai Stock Exchange on December 30, 2020. Then, BYD plans to plan the spin-off and listing of its holding subsidiary BYD Semiconductor, and authorizes the company and BYD Semiconductor management to start the preliminary preparations for the spin-off and listing of BYD Semiconductor.

In addition, according to the China Securities Regulatory Commission, power semiconductor manufacturers such as Dongwei Semiconductor, Xinwei Electronics, and Longteng Semiconductor have also recently completed listing guidance filing, starting their journey to enter the capital market.

Industry insiders told Jiwei.com that "IGBT is one of the most promising semiconductor power devices. The current market size is growing rapidly. At present, domestic power devices are replacing low-end and mid-end products very quickly. In the future, they will continue to extend to mid- and high-end fields. Domestic companies will usher in better development. At present, many power semiconductor companies have entered the capital market. In the future, more and more power semiconductor companies will accept the test of the capital market, and the capital market will also help the financing development of the power semiconductor industry."

Under the "hot support" of the capital market, the domestic power semiconductor industry will usher in rapid development. He Maofei of Guoyuan Securities pointed out that under the catalysis of market demand, policies, talents, funds and technology, the domestic power semiconductor industry is expected to enter a golden development period in the next 3-5 years. Whether analyzed from multiple angles such as the difficulty of technological catch-up, the progress of industrialization layout, and the impact of external factors, power semiconductors are one of the sub-sectors with the fastest progress of domestic substitution in the foreseeable future.