Outlook: In pursuit of better technologies: electric components

From anticipations of market recovery, the year that was turned out to be another one fraught with challenges. Already impacted by the continuing trade war and shutdowns due to the pandemic, supply chains have experienced a few more mishaps and missteps. There were the Suez Canal blockage in the early part of 2021 and the consequence of manufacturers' initial underestimation of demand that led to the knee-jerk response to stockpile. The ensuing shortage is not limited to components but extends to shipping containers stranded at ports of origin or destination or what Reuters called "containergeddon." All this combined has caused a far-reaching ripple effect to this day with no end in sight in the near term.

Against this backdrop, China has been strongly focused on its electronics manufacturing industry, aiming to boost the country's value proposition against the rise of alternative locations in Asia such as Vietnam, Malaysia, Thailand and India. The government has set out an ambitious project to turn the country into a "manufacturing powerhouse" and "network powerhouse" by 2025 as part of the 14th Five-Year Plan.

"By the end of the 14th Five-Year Plan period (2021-25), China will have built the world's largest and most extensive stand-alone 5G network and basically achieved full network coverage in urban and rural areas," says Wang Zhiqin, deputy head of government think tank China Academy of Information and Communications Technology. As for Huawei's 5G applications, they have been deployed in more than 20 industries, including manufacturing, and have been enabling more intelligent, efficient and safer production, according to the company's carrier business group president Ding Yun.

With digital infrastructure being set up, the shift to smart manufacturing, which has become the focal point for increasing efficiency and product quality amid rising labor costs and intensifying market competition in recent years, will pick up pace. There has been a steady stream of technology and machine upgrades that also included the adoption of industrial robots.

The Chinese government, in fact, has been encouraging this together with the Internet of Things (IoT). In 2018, the China Information Technology Industry Federation issued a guidance document, formulating the industrial internet and security and core product innovation platforms to promote smart manufacturing. A mobile IoT industry innovation center was set up, which offers support to enterprises on AI, industrial internet and NB-IoT technology and industry development.

Higher market goals

Market preference for high-end electronic components, which come from just a few industry players, and outsized demand have resulted in a supply shortage, which began in 2018.

To strengthen the components sector and boost its market penetration, China embarked on a three-year plan, announced by the Ministry of Industry and Information Technology at the beginning of 2021. This includes a sales target of $325.1 billion to be realized with fresh efforts to "cultivate a batch of internationally competitive local electronic components companies, with at least 15 of them having a revenue of over 10 billion yuan each by 2023," according to China Daily.

The initiative will facilitate the release of construction permits and financing, and provide assistance to meet required international standards, according to a report from Nikkei Asia. This extends to foreign companies who set up research and production facilities in China.

Material technologies

Hand in hand with further miniaturization across component categories, adoption of better materials to realize higher component performance is underway.

GaN has been hailed as the next enabling technology that will usher in more efficient but smaller power devices such as transistors. It outdoes conventional semiconductor material silicon, which has reached the limit in terms of heat and electrical transfer vis à vis transistor size. This means silicon transistors can no longer be shrunk further without impact on their performance.

GaN versions, on the other hand, benefit from the material's wide bandgap or capability of conducting at elevated voltages over time and allowing current to pass faster for better processing speed. As such, they are more efficient and produce less heat, with the latter property allowing components to be mounted tighter. Using them results in smaller but still robust devices, attracting attention in the power supply industry. However, adoption is still at its infancy. In China, manufacturers such as Xiaomi, Baseus, Elecjet, J. Zao, Ilano and McDodo have only been releasing GaN AC/DC adapters since 2020.

SiC, a nontoxic ceramic that can tolerate higher electric fields and will not fail even at elevated voltages, is another base material. Its breakdown voltage is five to 10 times higher than that of silicon, which is about 600V. This makes SiC components suitable in thermally demanding applications. Industry analysts are predicting such products will gradually replace not only silicon-based rectifiers but also Schottky and PIN diodes in the future. However, only a few suppliers in China are currently engaged in the development and production of SiC-based power devices. With greater market uptake and once technology threshold is hurdled, more are expected to venture into this category in the coming years.

There is also a shift to SiC and GaN in MOSFETs. As production of SiC variants increases, the price gap with traditional silicon-based types is narrowing and boosting market uptake. Earlier projections point to the former taking the lead in sales of discrete SiC power devices beginning 2021, while their GaN counterparts are not far behind.

MOSFETs in general have rebounded significantly, with the recovery from 2020 attributed to computing and consumer electronics applications, according to Yole Développment. In coming years, this momentum will get an additional push from the automotive industry, particularly the electric vehicle segment. In view of such a market opportunity, Chinese MOSFET suppliers have been investing in R&D to complement their silicon-based selections with SiC and GaN as well as super-silicon variants. This is to achieve higher frequency and output power and lower power dissipation.

In crystal oscillators, especially for high-density applications demanding tiny but heat-resistant components, ceramic is also expected to replace metal as primary material. With a metal lid, ceramic packages offer a hermetically seam-sealed housing, ensuring a stable atmosphere against environmental changes for the crystal's optimum functioning. Chinese manufacturers aim to catch up with industry leaders in turning out as small as 1008 SMD crystal oscillators in these packages for wearable devices, smartphones and medical devices.

Looking for material alternatives

The industry's dependence on rare-earth magnets is a cause for concern as their component materials pose a supply risk. Rare-earth elements (REE) are not easy to obtain, involving complex extraction and processing methods with significant impact on the environment. Producers have been researching substitute materials and other REEs that can be more easily sourced. The end-goal is to reserve precious rare earths for applications that really need them, which include electric (EVs) and hybrid vehicles (HEVs), and wind turbines, or avoid them altogether.

Rare-earth iron-nitrides (REFeN) and rare-earth iron-carbides (REFeC) are some of the potential alternatives currently under development. These are considered fourth-generation rare-earth magnets after SmCo5, Sm2Co17 and NdFeB. REFeN magnets have higher Curie temperature, lower temperature coefficient and better corrosion resistance than their NdFeB counterparts.

Semicon industry buildup

China's key electronic information industry hub, the region around the Pearl River Delta officially designated the Greater Bay Area, is also its largest semiconductor production base, with key sites in Shenzhen, Guangzhou, Zhuhai, and the special administrative regions of Hong Kong and Macau.

Since the Semiconductor Industry Alliance was established in Guangzhou in 2018, several production bases have sprung up. One is Shenzhen's Pingshan district, which now has at least 50 semiconductor enterprises. In the Pingshan High Tech Zone, which has a total area of 5.09sqkm, eight third-generation companies form a comprehensive supply chain of materials, equipment, design, fabrication, package and testing. As many as 40 suppliers, meanwhile, are based in the Hengqin district of Zhuhai.

The Greater Bay Area initiative also included encouraging cooperation among research institutes, universities and domestic manufacturers. This led to the establishment of the National Semiconductor Research Innovation Center in Macau in 2019.

Companies based in the region include major wafer suppliers such as SMIC, Guangzhou CanSemi and Tsinghua Unigroup, and key manufacturers of other semiconductor materials, including Capchem and Huate Gas.