Power Semiconductors
Power semiconductors is a densely contested sub-theme in which SiC and GaN supply chains are being rebuilt through new foundry partnerships, technology licensing and government-backed financing, while established device makers defend their silicon and wide-bandgap positions. The main risks are tariff and export-control exposure, single-source GaN wafer dependence, customer concentration and the conditional nature of some capital support.
Active institutional exposure flipped from a net outflow of $2.3 billion in Q1 2026 to a net inflow of $4.9 billion in Q2 2026. 64.7% of companies in this sub-theme saw increased active positions in Q2 2026.
Overview
Power semiconductors are the devices that switch, convert and regulate electrical power: silicon MOSFETs and IGBTs, plus wide-bandgap silicon carbide (SiC) and gallium nitride (GaN) devices, and the power-supply ICs and gate drivers built around them. Their end uses include EV drivetrains, industrial equipment, AI data-centre power and consumer power supplies. The sub-theme spans several layers. Broad-line device makers such as Infineon, STMicroelectronics, ON Semiconductor, Texas Instruments and Vishay sit alongside power-IC and GaN specialists such as Power Integrations, Navitas and Monolithic Power Systems. Wolfspeed supplies SiC materials and devices, and Coherent competes with it in SiC wafers and epitaxy. Specialty and external foundries including Tower Semiconductor, SK keyfoundry (which makes Magnachip's Power IC products), GlobalFoundries and TSMC supply wafer capacity. Tower shares a 300mm facility in Agrate, Italy with STMicroelectronics, and Tower relies on Cadence, Synopsys, Siemens and Keysight for design tools. Test-equipment enablers such as Aehr Test Systems support the chain. Competition overlaps heavily: Infineon, STMicroelectronics, Texas Instruments and Power Integrations contest high-voltage power supply ICs and GaN, and Infineon, ON Semiconductor and Wolfspeed contest SiC. Patent cross-licensing is a structural feature, including Infineon with Magnachip and Navitas with Infineon. Demand is tied to EV platforms, such as STMicroelectronics' long-term third-generation SiC MOSFET supply agreement with Geely Auto, and to power supplies that customers largely manufacture in Asia. Distributors such as Avnet are a significant channel.
Investment Thesis
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Key Companies
Related Events
Solid-state transformers represent a potential disruption of the conventional transformer supply chain that is already severely capacity-constrained due to data center demand. If solid-state technology achieves commercial viability at scale, it creates a new market for power semiconductor companies (SiC, GaN) while threatening incumbent conventional transformer manufacturers. Data center operators benefit from the higher efficiency, smaller footprint, and digital controllability of solid-state designs. The EV charging application extends the total addressable market. Conventional transformer makers face long-term obsolescence risk in high-density applications, though near-term demand remains robust given the existing supply backlog.
The commercialization of 800 VDC rack-level power delivery by two of the world's leading power engineering firms signals a structural transition in data center electrical architecture that will force procurement changes across the entire hyperscale build-out pipeline. Higher DC bus voltages reduce conversion losses and enable denser power delivery to GPU racks consuming 100kW or more, directly addressing the power bottleneck limiting AI cluster scaling. Traditional AC-centric UPS, PDU, and transformer vendors face product obsolescence risk if 800VDC becomes the dominant standard. Power semiconductor vendors supplying SiC and GaN devices for high-voltage DC conversion gain structural demand tailwinds. The deployment by Siemens — a tier-one global power infrastructure company — accelerates industry standardization momentum faster than startup-led alternatives.
The acquisition merges On Semiconductor's power and analog semiconductor capabilities with Synaptics' edge AI processing and connectivity portfolio, creating a stronger competitor in the physical AI and industrial IoT semiconductor space. This consolidation reduces the number of independent edge AI chip suppliers available to OEMs and industrial customers. Competitors in edge AI semiconductors including Microchip Technology, NXP Semiconductors, and Renesas face a more formidable combined rival. The deal signals that physical AI and edge inference are now large enough markets to justify major M&A premiums, likely accelerating further consolidation. Customers relying on Synaptics' standalone products may face supply chain or roadmap uncertainty during integration.
BYD's pan-European fast-charging rollout is a structural vertical integration play that mirrors Tesla's Supercharger strategy, binding charging convenience to BYD vehicle ownership and disadvantaging rival EV brands without equivalent networks. European independent charging network operators face direct competition from a well-capitalized OEM deploying proprietary infrastructure. Power electronics and charging equipment suppliers to BYD gain a large durable procurement pipeline. Legacy European automakers without equivalent charging networks face a widening customer experience gap. The five-minute charge capability, if delivered at scale, materially raises the competitive bar for charging speed across the entire European EV market.