Why IGBTs Will Be Shortage Until Mid-2024？

Image source Fuji Electronics

Insulated Gate Bipolar Transistors (IGBT) are semiconductor chips that are used in a wide range of modern applications, especially the ones that are tech-related.

You will find these chips in electric cars, smart home appliances renewable energy generators, and industrial machinery among others.

IGBTs ride on their superior performance and energy efficiency for their popularity. These two properties have kept them ahead of their competitors.

There is definitely a high demand for the IGBT.

But, we have a big problem here: IGBT shortage. This problem has been there for the past three years.

While most people expected the IGBT shortage to end in 2023, we have bad news for you.  Experts predict that the IGBT shortage is expected to last until mid-2024.

This is definitely bad news for both small-scale and large-scale producers who are depending on this semiconductor to run their products.

Let’s look at the top reasons why this shortage will run until 2024.

Increased demand for the IGBT

There is a beehive activity going on in the world of electrics and electronics. Both small and established companies are outdoing each other in coming up with new products and at the same time improving their existing electronic products.

At the hear of all these developments are the IGBTs. They are commonly used in the power electronics industry whereby they control the flow of current and signals. The transistors have the capacity to switch devices at high frequency.

Think of the developments in various fields such as electric vehicle, industrial automation,  and renewable energy. These three fields have received a lot of attention in the recent years.

For instance, there has been a surge in the demand for the electric vehicles. Automakers are trying to move from the traditional ICE. This has further been accelerated by rules and regulations from different jurisdictions regarding emission from combustion vehicles.

Electric vehicles depend on the IGBTs to control the flow of power from the battery to the motor. At the same time they control the power and signal flow from the controllers to the motors. In overall, they guarantee proper utilization of power in EVs.

The fact that the demand of EVs is on an upward trajectory all over the world, we should not expect anything less when it comes to the demand of IGBTs. The demand will will definitely strain the supply chain.

Similarly, the renewable energy industry is also growing at a fast rate. And as we have already mentioned, IGBTs are also used in running a number of renewable energy power systems such as solar power systems and even wind turbines.  As long as these power systems need some form of control, switching and regulation, then IGBTs will come in handy.

What about the consumer electronic industry? The demand for the electronic devices and appliances has also gone upwards. Perhaps we can blame it on the COVID-19 as it accelerated the shift to the digital world. Or, it could just be due to the need of better gadgets such as laptops, smartphones, and gaming devices.

In overall, the growing demand for new devices and technology has driven the demand for IGBTs over the edge. This is a possible reason why we should not expect anything better until mid-2024.

Continuous disruptions in supply chain

The shortage of IGBTs is likely to persist due to the disruptions in  supply chain at the global level.

The supply chain of IGBT is quite long and complex. It comprises sourcing different raw materials such as semiconductor chips and wafers from different countries.

A small disruption on a single location can affect the whole chain. This will eventually lead to delays and even shortage of transistors.

Now keep in mind  a series of events that have taken place in recent years and months.

One is the COVID-19 pandemic. While the lockdown rules are being relaxed at a global scale, we are still reeling from their effects.

The pandemic affected the production and supply of silicon wafers and other electronic components.

Researchers predict that it is up to 2024 that the chip market would have fully recovered from the effect of COVID-19.

Current political events have also disrupted the supply of IGBTs. One major event is the ongoing war between Russia and Ukraine. Both countries are key players in the semiconductor supply industry. For example, Ukraine makes some significant contributions in the supply of semiconductor materials for making silicon wafers.

The longer the war is prolonged, the more disruption we should expect in the supply of the IGBTSs, hence a prolonged shortage to mid-2024.

Geopolitical factors can also cause a major disruption in the global supply chain of the IGBTs. Political and economical differences between key global players in the industry can also be blamed for the transistor shortage that is likely to extend into 2024.

Taxes and tariffs imposed on certain raw materials will end up affecting the production cost of the transistors leading to a global shortage. In some cases, the sanctions can even affect the availability of the materials in some countries.

Let’s not forget the volatile currency exchange rates at the global level and the impact that they have on the supply chain. If the issue of currency exchange is not stabilized, then we should expect the shortage to go on until mid-2024.

In overall, unless something improves, the disruption of supply chain will prolong the shortage of IGBT until 2024.

Limited capacity

Another key factor that is contributing towards shortage of the IGBT is the limited capacity of the IGBT manufacturers. The companies are constrained such that they are unable to manufacture large quantities of IGBTs that will keep up with the ever-rising demand.

In the recent years, we have seen very limited activities in terms of the building of the new IGBT manufacturing facilities. Also, very few of such facilities have expanded their production capacities.

The low capacity is majorly blamed on the finances. Building manufacturing facilities for transistors is a capital-intensive investment. Even after setting up a plant, manufacturers will still require more funds to buy the right equipment for production.

We cannot ignore how expensive it is to get the raw materials for the IGBTs. Most of these materials are not easily available, and this has a direct impact on their prices.

IGBT production capacity is further affected by the scarcity of experts and technicians in the industry. It takes time and resources to get the best team that is fully capable of designing and developing the best transistors.

In overall, the limited capacity to produce has led to a shortage of IGBT. The good news is there are some efforts that have been put in place to counter the issue of capacity. We expect that with these improvements, the situation will be good by mid-2024.

Overview of IGBT

Image source Quora

The insulated Gate Bipolar Transistor (IGBT) is a type of bipolar junction transistor meaning that it has three poles. It is mainly used as a switch because it supports high switching speed and at the same time has high-efficiency rate.

IGBTs are divided into two main classes. These are discrete and modular. Discrete IGBTs are insulated and are mainly used for correcting power factors in circuits. You are also likely to find them in the DC/AC converters.

Common applications of the insulated gate bipolar transistors include driving the motor drives, air conditioning systems, renewable energy systems, uninterrupted power supplies (UPS), electric vehicles and hybrid vehicles, and welding machines among others.

From the application areas, you can tell that IGBTs are relevant and will remain to be relevant for years to come. They are suitable for both small-scale and commercial applications. For example, you can use the bipolar for your hobby project, and at the same time car manufacturer will use them for running vehicles.

To meet the different user needs, IGBTs come in different power ratings.  They are divided into low-power, medium-power, and high-power. The class will depend on the application area. For example, EVs and HEVs will use high-power IGBTs.

IGBT market insight

Even as we expect the IGBT shortage to continue until mid-2024, it will be prudent to know how these transistors perform in the current market. Which industry depends on these transistors? Where are IGBTs used most? From the insights, we will know what to expect when the shortage ends.

The Business Research Company published a special report on the IGBT. The report revealed various market insights about the insulated gate bipolar transistors. It highlights bot the current and future market scenarios.

According to the report, the market size for IGBT grew by  15%; that is from $7.27 billion in 2022 to $8.42 billion in 2023. In the same period, the compound annual growth (CAGR) was 15.7%.

The situation between Russia and Ukraine has dimmed hopes for recovery of the supply chain that was already on its knees due to the effects of the COVID-19 pandemic. The war has led to  imposition of sanctions on Russia, a key factor that has caused to inflation of multiple commodities. The war has also affected the flow of transistor compounds between regions.

According to the report, increased production of electric vehicles is expected to push the growth of the IGBT market. This is mainly due to the important role that these transistors play when it comes to DC to AC signals in electric vehicles.

A report by the International Energy Agency (IEA) revealed that there will be up to 125 million electric vehicles by 2030.  As the global sale of electric vehicles keeps rising so is the demand for the IGBTs. The report also indicates that the Asia-Pacific region remains to be the largest market of the insulated gate bipolar transistors.

Hope for the shortage to end in 2024

There is hope that the IGBT shortage will end in mid-2024. Every market indicator points towards a positive projection.

But, are there any signs of improvement?

Yes, there are numerous indicators of better days to come, especially after the second quarter of 2024.

We are already witnessing increased production capacity of the  IGBTs. Major manufacturers in the industry have announced their elaborate plans to increase their production capacities. Some have also announced their plans to upgrade from their current facilities.

We are also witnessing a wave of new players getting into the field of IGBT manufacturing. It is expected that such new entrants will fill the market void that is currently hurting the market.

Another indicator of a better 2024  is a healthy supply chain. The fact that many countries have toned down on the COVID-19 restrictions means that more borders have been opened and transporting both the raw materials and finished products will be easier. This will have a direct impact on the supply chain which will end up stabilizing the market.

Also, the ease of moving IGBT components and finished products will reduce the lead times for all the players in the industry.

In overall, as long as the current indicators stay constant, There is no doubt that 2024 will be a better year for the IGBT. For instance, IGBT manufacturers should get adequate support to continue expanding their manufacturing capacities.

We should also expect the supply chain to be streamlined by an emerging group of IGBT suppliers and distributors. These players should be able to fill the gaps that have been causing a shortage of insulated gate bipolar transistors.

Buy IGBT in China

Are you building products that will need insulated gate bipolar transistors? Or are you in the business of buying IGBT transistors in China in bulk? You should strive to survive the shortage. The easiest way of doing it is by buying from reputable IGBT suppliers and distributors.

This is where ICRFQ comes in. We are a reliable sourcing agent for IGBT. Our impressive reputation in this field speaks for itself. We source these bipolar transistors from the best manufacturers to ensure that our clients get premium-quality IGBTs.

Would you like to buy IGBT wholesale in China? Contact us and we will strive to deliver.

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