We are a designer, developer and global supplier of a broad portfolio of power
semiconductors. Our portfolio of power semiconductors includes approximately
1,900 products, and has grown significantly with the introduction of 200 new
products during the fiscal year ended June 30, 2018, and over 80 and 90 new
products in each of the fiscal years ended June 30, 2017 and 2016, respectively.
Our teams of scientists and engineers have developed extensive intellectual
properties and technical knowledge that encompass major aspects of power semiconductors,
which we believe enable us to introduce and develop innovative products to address
the increasingly complex power requirements of advanced electronics. We have
an extensive patent portfolio that consists of 722 patents and 108 patent applications
in the United States as of June 30, 2018. We differentiate ourselves by integrating
our expertise in technology, design, manufacturing capability and advanced packaging
to optimize product performance and cost. Our portfolio of products targets
high-volume applications, including personal computers, flat panel TVs, smart
phones, battery packs, quick chargers, home appliances, consumer and industrial
motor controls and power supplies for TVs, computers, servers and telecommunications
equipment.
During the fiscal year ended June 30, 2018, we continued our diversification
strategy by developing new silicon and packaging platforms to expand our serviceable
available market, or SAM and offer higher performance products. Our metal-oxide-semiconductor
field-effect transistors, or MOSFET, portfolio expanded significantly across
a full range of voltage applications. We also developed new technologies and
products designed to penetrate into markets beyond our MOSFET computing base,
including the consumer, communications and industrial markets as well as power
IC for the next generation computing applications.
Our business model leverages global resources, including research and development
and manufacturing in the United States and Asia. Our sales and technical support
teams are localized in several growing markets primarily in Asia. We operate
a 8-inch wafer fabrication facility located in Hillsboro, Oregon, or the Oregon
fab, which enables us to accelerate proprietary technology development, new
product introduction and improve our financial performance. To meet the market
demand for the more mature high volume products, we also utilize the wafer manufacturing
capacity of selected third party foundries. For assembly and test, we primarily
rely upon our in-house facilities in China. In addition, we utilize subcontracting
partners for industry standard packages. We believe our in-house packaging and
testing capability provides us with a competitive advantage in proprietary packaging
technology, product quality, costs and sales cycle time.
On March 29, 2016, we entered into a joint venture contract (the “JV
Agreement”) with two investment funds affiliated with the municipalities
of Chongqing (the “Chongqing Funds”), pursuant to which we and Chongqing
Funds form a joint venture, (the “JV Company”), for the purpose
of constructing a power semiconductor packaging, testing and wafer fabrication
facility in the Liangjiang New Area of Chongqing, China (the “JV Transaction”).
The total initial capitalization of the JV Company is $330.0 million (the “Initial
Capitalization”). As of June 30, 2018, we own 51%, and the Chongqing Funds
own 49%, of the equity interest in the JV Company. The JV Company substantially
completed its assembly and testing and 12-inch wafer fab facilities during the
quarter ended June 30, 2018. We expect to commence limited mass production for
assembly and testing in the second half of calendar year 2018, and trial production
for the 12-inch wafer fabrication facility toward the end of calendar year 2018.
Semiconductors are electronic devices that perform a variety of functions,
such as converting or controlling signals, processing data and delivering or
managing power. With advances in semiconductor technology, the functionality
and performance of semiconductors have generally increased over time, while
size and cost have generally decreased. These advances have led to a proliferation
of more complex semiconductors being used in a wide variety of consumer, computing,
communications and industrial markets and have contributed to the growth of
the semiconductor industry.
Analog semiconductors
The semiconductor industry is segmented into analog and digital. Analog semiconductors
process light, sound, motion, radio waves and electrical currents and voltages.
In contrast, digital semiconductors process binary signals represented by a
sequence of ones and zeros.
As a result of these fundamental differences, the analog semiconductor industry
is distinct from the digital semiconductor industry in terms of the complexity
of design and the length of product cycle. Improper interactions between analog
circuit elements can potentially render an electronic system inoperable. Experienced
engineers engaged in the design process are necessary because computer-aided
design cannot fully model the behavior of analog circuitry. Therefore, experienced
analog engineers with requisite knowledge are in great demand but short supply
worldwide. In addition, analog semiconductors tend to have a longer product
life cycle because original design manufacturers, or ODMs and original equipment
manufacturers, or OEMs typically design the analog portions of a system to span
multiple generations of their products. Once designed into an application, the
analog portion is rarely modified because even a slight change to the analog
portion can cause unexpected interactions with other components, resulting in
system instability.
Power semiconductors
Power semiconductors are a subset of the analog semiconductor sector with their
own set of characteristics unique to power architecture and function. Power
semiconductors transfer, manage and switch electricity to deliver the appropriate
amount of voltage or current to a broad range of electronic systems and also
protect electronic systems from damage resulting from excessive or inadvertent
electrical charges.
Power semiconductors can be either discrete devices, which typically comprise
only a few transistors or diodes, or ICs, which incorporate a greater number
of transistors. The function of power discrete devices is power delivery by
switching, transferring or converting electricity. Power transistors comprise
the largest segment of the power discrete device market. Power ICs, sometimes
referred to as power management ICs, perform power delivery and power management
functions, such as controlling and regulating voltage and current and controlling
power discrete devices.
The growth of the power semiconductor market in recent years has several key
drivers. The proliferation of computer and consumer electronics, such as notebooks,
tablets, smart phones, flat panel displays and portable media players created
the need for sophisticated power management to improve power efficiency and
extend battery life. The evolution of these products is characterized by increased
functionality, thinner or smaller form factors and decreasing prices. Our Power
IC and low voltage (5V-40V) MOSFET products address this market. In the area
of AC-DC power supplies for electronic equipment, data centers and servers,
the market is characterized by a continuous demand for energy conservation through
higher efficiency, which is driving the need for our medium voltage (40V-400V)
and high voltage (500V-1000V) MOSFET products. The increased application of
power semiconductors to control motors in white goods and industrial applications,
is driving demand for Insulated Gate Bipolar Transistors, or IGBTs. IGBTs are
also being used in renewable energy and automotive applications.
The evolution toward smaller form factors and complex power requirements in
the low voltage areas has driven further integration in power semiconductors,
resulting in power ICs that incorporate the functionalities of both power management
and power delivery in a single device. Power ICs can be implemented by incorporating
all necessary power functions either on one piece of silicon or multiple silicon
chips encapsulated into a single device. Additionally, the advancement in semiconductor
packaging technology enables increased power density and shrinking form factors.
Power semiconductor suppliers develop and manufacture their products using
various approaches which tend to fall across a wide spectrum of balancing cost
savings with proprietary technology advantages. At one end of the spectrum are
integrated design manufacturers, or IDMs, which own and operate the equipment
used in the manufacturing process and design and manufacture products at their
in-house facilities. IDMs exercise full control over the implementation of process
technologies and have maximum flexibility in setting priorities for their production
and delivery schedules. At the other end of the spectrum are completely-outsourced
fabless semiconductor companies, which rely entirely on off-the-shelf technologies
and processes provided by their manufacturing partners. These companies seek
to reduce or eliminate fixed costs by outsourcing both product manufacturing
and development of process technologies to third parties. Our model seeks to
achieve the best balance between technological advancement and cost effectiveness
by using a dedicated in-house technology laboratory to drive rapid new product
developments, while utilizing third-party foundry capacity for mature products.
This is particularly important in the development of power semiconductor products
due to the unique nature of their technology. While digital technologies are
highly standardized in leading foundries, power semiconductor technologies tend
to be more unique as they seek to accommodate a wider range of voltage applications.
Accordingly, third-party foundries, which are primarily designed and established
for digital technologies, can be limited when it comes to the development of
new power semiconductor technologies.
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