Hello, everyone. Welcome to this year's IPC call, and at the fairgrounds in Nuremberg. A very warm welcome to our two speakers, Peter Wawer, the Division President of IPC, and Peter Friedrichs, Vice President, SiC. The true experts in power within Infineon. With that, I hand over and please go ahead with your presentation. Oh, not to forget, for all in the webcast, if you want to post a question, please send it via mail to alexander.groschke@infineon.com. Thank you.
Yeah. Warm welcome also from my side. Thanks for the kind introduction, Alexander. We are happy to be back, so to say, right? Happy to be here. Almost unbelievable, three years ago. The good thing is, that after three years, you might expect some changes, and we would like to give you an update where we stand today, what the outlook is. As we all know, as you know pretty well, right, very interesting times, very challenging times, but also great opportunities for semiconductor manufacturers. We want today focus now on the update for IPC. As Alex pointed out, I share this presentation with my colleague, also Peter Friedrichs, because he's our key expert on silicon carbide, and we all know that silicon carbide is, at least for power manufacturers, of specific interest, right?
We come to that in a bit more details in a minute. Let me start with a big overview. How we see ourselves from Infineon, but especially also from IPC perspective. What is our credo or purpose? As we say, we empower a world of unlimited green energy. Due to the recent events, we have become aware not only that, of course, due to the known CO2 challenges, getting rid of CO2 emission is of primary importance, but also the energy dependence on fossil fuels, is of now recently of very, very high interest and very high concern, as we all know, to the ongoing war in Ukraine. Therefore, I think, this has a double the importance of this topic, right?
We are proud that according to the analysts, we are the number one provider of semiconductors in the area of renewable energies. We increase energy efficiency by our products due to improving efficiency, but of course, also being the driving force behind the energy transition from burning fossil fuels to generate electricity and heat towards, of course, using renewables, sun and wind predominantly. Of course, we have also a CO2 footprint, right? As a company. If you take into account the products we manufacture and sell, then we are of course already net positive to the positive benefit of renewables, i.e. wind and solar. We are working also to become carbon neutral regarding our own footprint.
I think that is also worth to mention that we have very ambitious targets to go towards green energy, reducing down to by 70% until 2025, becoming finally carbon neutral end of this decade. Let's have a look into the numbers. After having kind of challenging time during the corona crisis, flattish revenue in 2020. Again, then healthy increase out of the crisis, 2021. Underestimating a bit the potential of the market, but now clearly further increasing demand and also supply. We see a positive trend, right? We were plateauing a little bit shy of the 20% Segment Result Margin. Now for the first half, we are above 20% Segment Result Margin. The fiscal quarter we just announced, record revenue of EUR 30 million. We never have achieved before, so purely organic growth for IPC.
As you might remember or might know, typically the first half of the fiscal year is the weaker one, having the weakest quarter in fiscal Q1. Usually following the normal pattern, which we also expect for this fiscal year, the second half will be even stronger than the first half regarding revenue. Of course, we are in a tough environment regarding supply chain. China lockdown due to reoccurrence of the COVID virus might impact our performance here and there. Let's see. So far in the first half, I would say we managed decently, only minor impacts regarding revenue, shortcomings for IPC. Key customers, I would say no change in general. Of course, very nice balanced traditional industrial customers and upcoming, fast-growing customers in the area of renewable energy. I would say very nicely balanced portfolios.
Of course, these are the big customers. Not to forget that IPC is highly diversified regarding products and also customer base. We talk about thousands of products and also thousands of customers in total. Here, of course, the well-known big ones are named. Interesting, I would say also the revenue split. Please note that this is the revenue split 2021. I think also historically not very big surprise, but I think I would like to highlight the topic of SiC, which we put here now dedicated to signal that this is meaningful, a number. As Peter will show a bit more in detail, we will almost double this amount in the now running fiscal year. These are the 2021 numbers. We would love to double.
We will not make it completely due to supply constraints, but very aggressive growth that we are executing on silicon carbide-based products. With that, I would briefly guide you through how we see the applications we serve. On the left-hand side, you see the symbols indicating the application, and the percentage number is the exposure to this application revenue-wise for IPC. Meaning roughly 1/3 of revenue from IPC goes into automation and drives. Five years plus ago, this number was well above 50%. The message is very clear. While this is still a very important big chunk of our business that is slow-growing, disproportionate growing and the high growth area are renewable energies and of course also power infrastructure, which outgrow also for the foreseeable future for the next years to come, boosting our overall growth looking forward.
The current status market outlook 2022 is as indicated by the green arrows. Automation and drives is quite resilient, in a very good shape also in 2021 continues to be in good shape in 2022. Renewable energy generation, likewise, especially PV is very strong. While we saw certain weakness in the area of wind, it's basically overcompensated by the very high demand of PV. Basically, we're sold out for the near term. Even maybe beyond 2022, we see this very high demand. Home appliance, very clear. That's a topic which used to be strong in 2021, but it's very close to consumer business.
This is something where we think we are over the top regarding high demand and expect declining, on the customer side, while we continue in 2022 and also for 2023, major home appliance is expected to be a bit more blurry. Transportation was not booming, after COVID appeared. On the transportation side, investments into infrastructure and high-speed trains, where a big bunch of the products are being used, stalled, really significantly went down. Until today, we digest a certain amount of idle because the business did not recover. We now see really a silver lining also increasing book-to-bill. Transportation, I would say trend recovering in the right direction, for the foreseeable future. The other topic regarding power infrastructure, and I will comment on this in a bit more detail. It's another very strong growth driver.
Longer term, looking forward, only close to 10% share of our total revenue, but that is very solid double-digit growth looking forward. I expect overall something 15, 16% CAGR for the next years to come. Others, likewise, positive trend. Now I would like to draw your attention to some selected examples. That slide we also showed at the Capital Market Days a couple of months ago, but I think it's nevertheless very impressive. You see on the left-hand side, the indication to what extent power semiconductors are being used in the area of wind, solar and storage. Obviously for a semiconductor manufacturer, it's very positive that we see this trend away from fossil, where basically rounded per megawatt, the euro content, is basically zero, right?
Instead of zero, we see here this kind of range between 2,000-5,000 in the example, in the given example, semiconductor content per megawatt being installed. Now you see here the additions in 2020 for the given example, storage, solar and wind. 2021 numbers not yet available, typically middle of the year, and they're expected so rather soon, but these are the numbers for 2020. 114 G-W wind addition, solar 134, and storage five. Now, there are a couple of scenarios looking forward regarding the targeted CO2 reduction ambitions and the so-called sustainable development scenario provided by the IEA that estimates that carbon dioxide footprint is being reduced to zero until 2070 on the globe. That is rather a bit longer term, right? 2070. Basically, everybody agrees that this is not aggressive enough.
If we would pursue this scenario, then we would need wind 110, somehow fits to the status quo. PV 240, almost doubling or let's say adding 100, and significantly increasing factor of four the amount of storage already in this decade. If we become a bit more aggressive and say, "Hey, 2070 will not be sufficient," because we have the problem right now and we rather have to act more aggressive and sooner, we come to the net zero emission scenario, NZE, which means that we pull the whole thing in under 2050. That is still many years to go, right? If we want to achieve this, then you see here the numbers doubling on the wind side. Again, addition of close to 200 G-W here for solar and of course another significant increase for storage.
On the right-hand side, you see then exemplary under 2030, what that would mean regarding the accumulated additions in solar power capacity. I think these are very impressive, very big numbers. I think there are a lot of arguments why it will go into that direction. Because as we see regarding levelized cost of electricity, the renewables are there in many areas, in many regions of the world. They are meanwhile, regarding levelized cost of electricity, the most competitive also, not regarding incentive and subsidy schemes. There in most regions of the world need not be any more subsidy. The other thing regarding the independence of fossil fuels, of fossil fuel suppliers of coal and gas suppliers, right, has due to the recent political developments, become a very high interest, especially in the developed economies.
All good arguments why we believe that will move on. That's not enough, right? For example now for Germany, but the example I think in general holds, right? When we change the energy transmission system towards renewables, that means massive change in infrastructure. Infrastructure needs to be expanded, needs to be renewed, needs to be set up. These are the power connecting grid lines planned for Germany, Ultranet, SüdLink, SüdOstLink. What is not mentioned here is, of course, also the combiner and transformer stations from the offshore sea parks, where typically the energy is collected offshore, 200 KM out in the sea, then transformed via such kind of HVDC transformer stations, brought to the shore and then again converted and fed into the grid.
For each converter station offshore, you need offshore and then onshore for the conversion, such kind of huge stations. These are EUR 200 million which need to be invested here. They are basically these converter stations are full of IGBT modules of this kind of style. We have a very good position in this area with our existing technologies. Those technology are slow switching, they are expected to stay with silicon, by the way, out of cost competitiveness considerations. This is also a by-product of this transformation, which is perceived very positive for us short, mid and long term.
Another example which now pops up, becoming a huge growth driver also compared to three years ago, we now have a feeling and an estimation to what extent that will fuel our growth is the topic of EV charging infrastructure. This is a very interesting topic where we see also the benefits of now SiC products, because with help of SiC products, you significantly increase power densities in fast switching applications. I think, Peter, you will also briefly comment in the technical session, and very clear we are, from a semiconductor perspective, a system supplier being able to supply microcontroller, gate driver ICs nicely fitting to each other, and then depending on the power you need, either discrete silicon carbide-based or easy modules.
I can tell the initial designs, of course, of these stations were made still by IGBTs, but that is now really quickly converting towards silicon carbide because in the same form factor, up to 30% more power can be derived out of the station. Very clear value proposition. Okay. With that, another example, having the smart grid being connected to your home, right? You have a combination of now many dimensions. You want, if you're lucky and you have a roof, right, and it's well-suited, right? You want to generate your electricity to a certain extent on your own, which I do since quite some time. You now consider it, storing it if you can afford and have the ability to set up a storage system.
Of course, the other thing is that you would like to connect, once you have an electric car, you connect your electric car. The interesting thing is that, of course, you can also use the car as a storage and a buffer system, right? That is not a vision here, that is already reality, that now on the system side, these kind of topologies and system solutions are being offered that you can use basically generation, storage, and of course also transportation together with the grid connection in your connected, energy connected home. Again, super value proposition for semiconductor manufacturers, and we are trying to serve each and every dimension which we can address with help of our semiconductors. Now coming to the end of my introductory or speak also a perspective on the customer side.
We invested quite a lot in developing our web-based community. Of course, we have the traditional forms of supporting our customers. This is also converting more and more to a digital service, right? Due to VR glasses capabilities, et cetera, and of course due to the limitations of COVID, lesser travel, lesser on-site support, physically, but a lot of support virtually. Now we meanwhile developed nicely the community, the web-based community, where I just wanted to share some numbers here with you. Several thousand of users, a lot of discussions ongoing, particular interest in our SiC forum and huge amount of monthly page views as an indication that we are here on the right track. Last but not least, what we also get out of this customer interaction that we want to expand our offering beyond the hardware, right?
Also providing services regarding analytics, about lifetime, about performance of the system, where we now offer a web-based service where the customer can upload his mission profile for the given application and derive certain information via simulation of the specific topology he is using, he or she is using, and then deriving automated information about lifetime, about use cases, being able then online supported to optimize its system. With that, I would like to hand over to you, Peter, and you give us a more detailed insight into where we stand on silicon carbide.
Yeah. Thank you very much, Peter. Yeah. Once more, it's also my pleasure to be able to again share with you our development in the area of wide bandgap. We have a very long history in this segment, especially in silicon carbide. It's, you know, more than 25 years that we are in this technology, more than 20 years in the market. We are very happy to say that we are finally also able to harvest, you know, based on the experience we have gained in this segment. Of course, different ingredients are required to be successful, even in the wide bandgap market, even if it's a very big hype market. Therefore, would like to make you familiar with our recipe for wide bandgap success in the next few minutes.
Yeah, first of all, I think this is well known to the community also to you here, the growth rates we expect in the wide bandgap arena are substantial, by far higher compared to the global power semi market. In case of silicon carbide, expected until the middle of the decade, close to 40% CAGR with a potential of close to EUR 5 billion revenue. Gallium nitride, even higher growth rate, of course, coming from a pretty low level. So therefore, the expectations are high, the potential is very high, and we as Infineon, we feel pretty well positioned here. Looking into the core topics Pit already mentioned in his part, e-mobility, infrastructure, renewable energies, these are the key topics for us in the industrial division.
The e-mobility infrastructure is an enabler for the e-mobility itself, so we have the products here. We have a very broad customer base meanwhile developed, and also in the case of gallium nitride, the products we are having right now out are addressing the mega topics for gallium nitride on the short and midterm scale, chargers and adapters and data center power supplies. Of course, in the future, more to come even in this segment. I will explain it a bit more in detail when going into the portfolio, the current one and into the outlook. Revenue-wise, yeah, we are very happy to report last year, close to 100% increase of the silicon carbide revenue. Also for this year, we will come close to that.
At the moment it looks like that we can increase our revenue by 80%. A little bit also influenced by the fact that we are stating this here in U.S. dollars, and I think you are all familiar with the euro versus dollar development. In general, again, significant growth rates, so we still believe that the $1 billion revenue for us at Infineon can be possible in the mid-2020s with a healthy share between industrial and automotive applications. What are the baselines here? Of course, a very strong position already today in the market, especially the recent market reports indicate that we are climbing up to number two with respect to market share in silicon carbide.
If you just look into the industrial landscape, that's where we stand here from our IPC division, we can say we are clearly the number one here amongst the players right now out. Of course, this became possible because we had the highest year-over-year growth among all our peers here. Very important, very broad portfolio, so you will see it in one of the next slides. We were able to increase the width of our portfolio with respect to product types, to power ratings, blocking voltage classes significantly, and this of course enables us to win a lot of sockets, since this customization topics are having a specific product for a specific application became more and more relevant also for silicon carbide on.
We are also very happy to state that already first products based on our Cold Split technology are running in production or basically shipped to customers. That was a pretty fast development, a bit faster than we expected by ourselves. We gave us three to five years to commercialize everything. It took us a little bit less than three years, what was really a very great achievement, also highly recognized, not just by our management, but also by our customers. A big debate is always about the technology selection since we have the big discussion between the trench technology and planar technologies. Many of our competitors are still with planar, planning for trench in the next generation.
We decided to skip the planar configuration, and the motivation for that or the reason I would like to explain once more here with this simple graph, which indicates basically what we call a technology curve. Such a technology curve always basically reflects the possibility to optimize your device with respect to reliability and performance. There's always a trade-off, and then it's of course in the decision of the manufacturer where to put the focus, whether more on reliability and performance. If you look into the landscape of the planar devices today, so basically not giving you numbers, but from a qualitative point of view, if you accept that this is positioned there.
We decided for us with our trench technology, basically since we have now the ability to increase the performance, that we don't go just here completely to the right with respect to performance, because the reliability we see in the planar configurations is still not sufficient. Therefore, it was our cautious decision to move up a little bit here on this graph to increase the reliability. Sacrificing basically a part of the performance opportunities we have as a trench compared to planar in order to offer here to our customers, a device which is really comparable to the well-established IGBT technology, and this is highly recognized, also basically reflected in the commercial success we have with our first generation. The second generation is basically very close to be released, already sampled to key customers.
What we are going to do here is, of course, we will not jeopardize our very high reliability standards. That means, we will here in this case then fully utilize the option to increase the performance. Positioning again will then be here at this place, so maintaining the reliability we already deliver today, but gaining in performance. As already mentioned, portfolio is key. That is the experience we have made, not just for silicon carbide, but also in our silicon world. For that reason, we significantly increased the number of products, the number of platforms, which we equip with silicon carbide.
Just basically today or yesterday here at the PCIM, we released a completely new blocking voltage class, 2 kV, which is a perfect fit to especially the renewables and storage systems, which are based today on higher voltage bus levels. We have a couple of very interesting customer projects in the very high voltage segments, especially addressing traction. There has been some press releases also over the last few months, which already show the potential of silicon carbide in traction systems. There was one about the tram in Munich, proving basically an energy saving potential of 10%, which is really substantial, enabled by silicon carbide. This is a very nice opportunity which is going to come.
Also in the existing segments of 1200 volt and 650 volt devices, here we increased the number of components, we added new package platforms, we upgraded the existing technology to the so-called M1H platform, which gives the user a much higher flexibility with respect to the driver design. All in all, very nice development and basically also the ground for the success we were able to show over the last years. Believe me, we will continue here rolling out more products, new discrete platforms are in development. One is already launched now with the 2 kV technology. Also in the automotive segment, which is not directly displayed here, a lot of new developments is ongoing and will be launched over the next couple of months. Same for gallium nitride.
There are some voices that it's pretty quiet about gallium nitride for Infineon. We are pretty successful also here with gaining new designs. We took our time to develop the technology into, and from our point of view, a very mature and especially very reliable status, because this is basically what differentiates us in many cases, not just in wide bandgap, but also in silicon from our competition. You see here the lineup which we have already launched respectively, which will come up within the next few months. What will be new is a segment of 100 V-based components based on Schottky gate HEMT structure. We are also going to add further versions of the IPS solutions.
These are small systems in a package, not just the power part and the driver, but also adding here controller functionality, so it's basically a very easy-to-design in solution for markets which are very dynamic, where basically also the customers expect, let's say, a product with a lot of functionality already from the beginning. We also plan to add some further package platforms here for our higher on our 600 V, 650 V technology. Basically new versions of CSMD platforms, which are then intended to address the target markets for gallium nitride, which we see at the moment predominantly in the already mentioned power supply segment, in the charger segment.
With further additions of the portfolio, also low power drive segments will be addressed and, to a certain extent then also charger applications in the cars, off-board and on-board for lower power ratings. As already mentioned by Peter before, one additional aspect of our success in the market is that we are not only offering the power part, but also the ecosystem around. One important ingredient, especially for wide bandgap, are driver components, since driving, operating the parts is, to a certain extent more demanding compared to silicon technologies, especially for gallium nitride, but also for silicon carbide. We are very happy to say that for each and every component, we are now able to offer also a perfect fit with respect to a driver IC, which meets the requirement of those new fast switching devices.
There are aspects like accurate timing behind, aspects like very high voltage transient immunity. This is all then integrated already in those driver ICs up to the protection of the new components against failures, which are a little bit different compared to silicon. This is all done here. It goes from very easy solutions with a low level of functionality, just turning on and turning off the device, up to driver ICs with the ability to program them, where basically you can eliminate the complete design cycle on board, because basically you set up your system and you program your driver IC basically on the fly in the board, which reduces significantly the system design time at the customer. What are our target markets?
We split them a little bit into the ones where we are already very successful, where the penetration rates are substantial. In some of them, like especially EV charging, basically they are already dominating the landscape. IGBTs can only be found in a very small number of those solutions. Here we already reached the so-called tipping points, which for us is an indication that the majority of the products will switch to the new technology. Power supplies are basically in this transition phase, industrial power supplies, same for onboard chargers. We have a very bright outlook also here in the case of silicon carbide for drivers, the storage systems, commercial aircon systems, home appliance, very interesting aspect. This is very much cost-driven, but still, now we have a lot of interesting discussions also in this segment.
Wind power and traction we already talked about. A similar picture then for the gallium nitride side, charger, server, data center, telecom is basically already tick marked. Motor control for small power motors is a very interesting topic today, increasing more and more in the focus for gallium nitride products and all the other things here, of course, in future also will add here. I mentioned already the onboard charger topic, wireless charging becomes very interesting. Audio amplification is already, yeah, in a small level present for gallium nitride. Of course, major home appliance are target markets for gallium nitride, where the product portfolio will be oriented on in the future. A very nice development for us, I would like also to share with you, and this is basically the width of applications we are now able to address with silicon carbide-based products, for instance.
If you look back in the fiscal year 2017, that was all about solar. You know, 80% of the design wins in 2017 were in the segment of solar string inverters, predominantly boosters, but also inverters. Only a small portion of other segments could be addressed by silicon carbide. This has been changed significantly if you look into the last fiscal year. First of all, the sheer number increased by the factor of five. If you look to the distribution, that is a very nice development for us because it shows that we can base really on a very wide range of applications. Of course, also then meaning a very high number of customers. The penetration into the industrial segment is reality, that is no longer concentrated to few customers and one single application.
Basically all those things here, like UPS, transportation, et cetera, contribute substantially. If you look to this picture in two or three years, we will see again a different distribution with more focus of other applications and maybe solar dropping with respect to the share. Also this number here, the 5x will increase in the future. Enabling factors are that we are able to differentiate in technology. Chip technology, trench-based is one key aspect, but on the other hand, we also need to facilitate the interface between the chip and its environment. This is in case of wide bandgap components, not so easy because typically we have very small chips compared to silicon. What is a certain hurdle, especially if you want to manage the devices and the application with respect to thermal performance.
Here we introduced recently our so-called .XT technology also for discrete components. That is a technology we have in modules in a certain little bit different realization way in place for a couple of years, but now also for discrete, it's available. What is here the major improvement, we replace the backside contact of the chip in the package, which is traditionally a solder process by a new approach based on a diffusion soldering. A different metal on the backside forms a very solid, highly performing contact to the lead frame. It brings a lot of benefits, especially we can increase the thermal dissipation capability significantly. That meaning one and the same chip can now handle a much higher power rating.
That basically for the user means without big changes he can basically increase the power handling capability by 30%. It's very simple. There's nothing that is a big increase in cost. It's rather the other way around. It's just a new die attach process, even eliminating a certain step in the back-end processing. Very important for silicon carbide and also for the trench technology, we have typically smaller die in SiC, and trench is even smaller than planar. What, as mentioned, is a challenge for the thermal performance, but with this technology, we can compensate for that drop because it simply significantly reduces the thermal resistance, and therefore, we can still maintain the higher power handling capability even if the chip becomes smaller.
We are very happy that we received for this development just two weeks ago, the Deutscher Innovationspreis. Sorry for not translating it into English because German Innovation Award is a little bit different, so therefore we have to be precise. We have been the winners for big companies this year in 2022. This also recognizes basically our way to be a leader, not just in the market, but also in the technology. Recently, we added our 2 kV technology. We launched it officially here at the PCIM. We have shown it already in the portfolio, so what is behind here?
The biggest impact of 2 kV-based silicon carbide MOSFETs in power conversion systems, here an example from some PVs, that we are able to increase the so-called power density in the formula kilowatt per kilogram. This is important because in those installations, typically the weight of the system decides how many installation guys you need in the field? Here we were able to basically achieve such a big step forward that customers now are moving away from the multilevel topologies which have been used before to the single stage enabled by 2 kV. You see an example from one of our lead customers, this is the evolution of those systems.
Now in 2022 we have a 2 kV system having then this very nice power density ratio enabled, and again, enabling technology for that 2 kV silicon carbide MOSFETs. More to come because the same story is also valid for energy storage system for future charging of cars. Also here we see a trend to higher voltages, because higher voltage typically means you have less current, less copper, so again we are back to the story of saving materials. Solid state transformer in the world of DC energy transfer became more and more relevant, so also here you will find a use case. Then of course there's big topic of PV, which is moving to 1500-volt bus system. This is going to be enabled with this new technology.
I mentioned the high voltage outlook we have already in place, so here we are very happy also to show one example together with a big customer in the traction segment, in this case Siemens. If you have the pleasure to go by tram in Munich, you may be lucky and find this particular streetcar here equipped with silicon carbide, so it was already for more than one year in operation, 65,000 KM without any problems. Again, two substantial improvements, one is the energy saving potential, 10%, which is basically in today's times something what is very much appreciated by the operators of those fleets. That's also very interesting for people living basically in towns in the vicinity of those streetcars, a significant reduction of motor noise.
Not just by the way, the motor, but also the auxiliary power. If somewhere a tram is parked in your vicinity today, you will always hear some noise due to the auxiliary power supplies running there. If it's coming with silicon carbide, the noise is going to be completely eliminated. Substantial advantage is possible here. Also the customers really expressed their thanks towards the cooperation we had here in a very let's say ambitious project. As mentioned here by Ingo Wortmann, the head of mobility at Stadtwerke München, they are really interested in those solutions. They will pull also towards their suppliers to implement those new technologies, what is also good news for us and for silicon carbide in general.
Yeah, all in all, we have a big future, and we have made some decisions, so I would like to hand back to Peter to give you a bit an outlook where we are heading.
Yeah, thanks a lot for giving us these technical detailed insights. I think I hope this helps you, right? To also understand the value proposition beyond the pure material physics. It's much more than having one MOSFET, right? It's about considering and understanding the requirements from the system and having the appropriate answers based on customer needs. I think we hopefully conveyed to you that the future of IPC industrial business is bright in silicon, but specifically also in wide bandgap silicon carbide. The decision has been taken and also officially communicated, right? That we massively continue investments in capacity expansion. Our Kulim site, see also the discussion we had just before this meeting, right?
It is the perfect area where we now have already a huge 8-inch economy of scale-wise, very competitive facility, which you see on the left-hand side, two modules. Now we add a third even larger module where we will establish from 2024 onwards. Manufacturing is expected to start in the second half of 2024, where we now focus on ramping up wide bandgap silicon carbide and gallium nitride. In total, we will invest there more than EUR 2 billion, and also the revenue potential is significantly above EUR 2 billion. Yeah, the key data I already disclosed, so we significantly believe in the growth perspective of these technologies. I think coming to the very end, last slide, we see that we outperformed the market over the past five years. On IPC side, we have been specifically resilient also to the COVID topic.
Of course, growth was rather flattish in 2020, but we overall think that we are on a very sustainable growth path due to the addressed mega trends we already discussed. SiC portfolio, I think no need to reiterate, seeing from the numbers that we are perceived as leader in industrial applications. Then another topic I would like to highlight, we are a firm believer that looking into the sheer
Discrete module product is not enough, right? We have this perspective, and I think also Peter nicely conveyed the message that we need to understand the application, designing our products and the total product offering consisting out of the semiconductor switch, gate driver, and microcontrollers in an appropriate way that we help our customers to get the best value proposition out of their application together with our semiconductors, might this be silicon-based, silicon carbide, or gallium nitride, doesn't matter. We will find the best solution together. Complementing this with help of reference designs, that is a very important topic for the customers because, as Peter mentioned, wide bandgap is not a drop-in replacement.
We want to lower the hurdle for our customers, proposing them reference designs, which in certain areas are quite complex, like DC/DC converter stage for an EV charger, which you can download on Infineon webpage, for example. Software and of course, also digital services, which I touched upon very briefly looking forward. With this, we're done. Thanks for your attention for today, and I think now we go for the Q&A session, and feel free. As Alex indicated, we will have Q&A here in the room, and you write an email to Alexander Groschke. Please.
Thank you very much for the presentation. It's François-Xavier Bouvignies from UBS. I would start maybe to talk about Siltectra. We didn't talk too much in the presentation and the progress you made since you acquired the company. Where are you in this process and development for mass production, and which impact should we expect, you know, depending on when it comes? That's my first question. Second one, on the trench first generation, we saw maybe like two approaches, some are using only planar, you seem to invest more in trench. The second generation is on the way, as you mentioned. Can you talk about the improvement of the second generation versus the first one, and what's the advantage versus planar? Should we expect, you know, on the battery or anything you can share? Would be great. Thank you.
Should I? Okay. Yeah. Starting with Silitectra I think it was just mentioned in one line, but of course, it deserves a bit more attention, you are right. Well, we are very happy to say that we could qualify our split technology to generate own wafers out of boules we are purchasing already last year. In September last year, this qualification process was successfully finished, so we got the release to use this in-house produced wafers for normal production on small scale.
Of course, we have a pilot line in Dresden, so we transferred the startup like lab we acquired in 2018 into a small pilot line able to offer, let's say, a smaller portion of our total demand with respect to DT wafer starts, but we are operating this line now since last year in a two-shift system delivering certain amount of wafers on top of what we have purchased into the manufacturing. Of course, we will not stop there. We have already now made two decisions. One is to install a very high volume production site also for this split technology together with our efforts for front-end manufacturing in Asia. This is basically already started.
Here the technology transfer is initiated, and if everything runs well, in two years from now, we will also add material from this new site. Also in Dresden, where we have the pilot line today, we are again moving into a larger facility, again increasing here our capabilities. This is a primary focus of continuing R&D, but still having also small volume production capability in place. All in all, we have commercialized the Cold Split technology, but there's more to come. There's more opportunities based on this technology in the overall device flow, and this is what we are going to pursue over the next years.
If I may just a quick follow-up?
Yes.
What is the hurdle that you see still to, you know, to make for really mass production? Is there any hurdle still?
I think it's a question of ramping now. One aspect is, it's a new technology. It's not like in a traditional device technology flow where you can ramp by just adding available tools into clean room. Here we also have to deal with the fact that there's some new tools. We need somehow to, let's say, transfer also the tool park into an automated high volume production setup. That is what we are addressing right now. The rest is just execution, I would say. Regarding the question trench second generation, it's a new generation in our understanding. If we define a new generation at Infineon, we always change what we call the cell, either with respect to the cell concept or with respect to the dimensions.
Second generation will be a further shrink, relying more or less on the first generation device concept, but improving the power handling capability for a given die area by 25%-30%, depending a little bit on the application. This will be the major, let's say Added value with the second generation. There are other smaller aspects then added into those developments, so also related to an increased portfolio, new package solutions. There might be new metal schemes available with the second generation. But the major aspect is an increased power handling capability while maintaining all or most of the other features. Because they have been successful, they are successful today, so it's further steps then to, of course, reduce the cost and to increase the penetration rate. More revolutionary things to come, but the second generation is more or less a shrink.
Thank you. Andrew Gardiner from Citi. I just wanted to come back to a point you made, Peter, about sort of the energy grid installations and how that was a slow switching application, and therefore you weren't worried about silicon carbide coming in and cannibalizing silicon IGBT. Can you sort of speak to that more broadly across the IPC portfolio at the moment? You've, you know, clearly seen an increase or, you know, diversification in the order wins that you're getting for silicon carbide. But just can you give us an idea of perhaps the percentage of your portfolio or revenue base that you're quite comfortable will not be cannibalized in the future and perhaps that may be?
Yeah, thanks for the question. I think we learn while we walk, right? If I look now back over a longer timeframe, I would say from today's perspective, we see that silicon carbide can go further than we thought maybe four or five years ago. That is always going in line, of course, with the understanding on the system side of our customers, right? We're together running through this kind of learning curve. Generally speaking, you can make a statement that we say the faster the switching speed in the application, the more likely it's silicon carbide, either today or tomorrow, right? That is true for the EV charging system, that is true for the PV inverter. If you go to the grid, that's another extreme, right? You are switching very slowly today, right?
Also the innovation cycle on those grid infrastructure is extremely slow. Therefore, the confidence level that this stay in silicon for the value proposition, cost performance aspects for the foreseeable future, the confidence level is very high. Then we come into the market of drives, which is our big market, as you have seen, right? Something like 1/3. Here it's also a mixed bag. I think there are certain applications like servo drives, where out of performance considerations, and it's also volume, floor space considerations in the applications, there is a value proposition for silicon carbide as well. But for general purpose drives, right, certain very cost-sensitive, not fast switching application because the switching speed is determined by the rounds per minute, right, of the drive.
For the foreseeable future, we do not see any interest in silicon carbide as we speak. I don't want to exclude that there might be innovations coming up also in the drives area with where this picture would change, let's say, in 5+ years from now. I would not exclude this one. For the time being, that is also demanding and requesting for the next generation of silicon IGBT that we are also bringing to the market. IGBT 7 is in the market. We just launched also the 1,700 V, and we also will have an IGBT 8. IGBT 9, I don't know yet. There's still also a future in silicon that should not be underestimated, right? We have economy of scale. 12-inch will for sure not be in this decade in silicon carbide.
Here I make a bold statement. So far, I think the race is on, while definitely more and more applications are being eaten up by silicon carbide. That's the dynamic.
Thank you. Just another one sort of specifically on the silicon carbide growth. You've kept your target, vague though it may be, in terms of the timing of $1 billion of revenue sort of middle of the decade. Some of your competitors that are currently behind you in terms of the market share that you showed on the slide are saying they're gonna get to a billion-dollar run rate much quicker. I'm just wondering what you make of the competitive dynamics, how you feel about your win rate relative to peers, and does all of that sort of mesh?
Yeah. I think it's exciting, I would say. There are others who are more aggressive than we are, that is true. I think, now showing the growth rate that we have shown, right? Now growing year-on-year 80%, I think it's something, right? The point is you always have a very high growth rate if the absolute numbers are small, right? The higher they get, the more challenging it will be. I think I would say we take it, from a competitive perspective, and we will try the best to keep our share and defend our share. I think to be honest, everyone has to make his own judgment regarding also investments. You need to have the clean room space, you need to have the specific tools and equipment.
We know today the lead times are huge for equipment, right? If you have ordered them already two years ago in big, big numbers, then you're lucky. If not, we might see here and there a delay on the execution side. Let's see.
Hi, Olivia Honychurch from Jefferies. Picking up on the $1 billion of revenue target by 2025. How can we think about the split between industrial and automotive by that point? Clearly industrial is the larger part of revenues at the moment. I think Peter said it would be a healthy split between the two by the mid-2020s. Can you give perhaps some more numerical pointers on that? I suppose how can we think about the growth rates between automotive and industrial between now and mid-2020s?
I think, giving a rough indication, right? I would say we had definitely a head start on the industrial space because we were from the beginning very much focusing on selected applications, understanding the dynamics on the customer side and then providing tailor-made products, right? For the given reasons, having also key customers. I would say the strategy that STMicroelectronics pursued on the automotive side, more or less we pursued a bit on the industrial side, if this is a fair comparison. 80/20 like this one. Looking forward and of course as the market numbers indicate, the sheer amount of market on the automotive side is of course much bigger compared to the industrial space. I think the euro numbers are not too wrong regarding the comparison of market size.
Looking forward, the bigger chunk of growth at Infineon will come from the automotive segment. Very clear, right? Where we will try everything on the industrial side to defend our market position in certain segments where we are definitely, from today's perspective, in a leadership position. I think very clearly, automotive, I expect that over the next couple of years, automotive will outgrow us, yeah. But also not to be underestimated, right? The very fragmented area of industrial products is also a source of profit. While we are in short supply, generally speaking, right, having higher demand, we optimize of course profitability also addressing those sockets where we see the best margin, right? And it's not always on the very high volume opportunities.
Great. Thank you. One more, if I may. I think you've given a EUR 1 billion order book size for GaN. Can you give us a rough estimate of what the timeframe on those bookings coming through would be? I guess similarly, can you give an order book figure on the silicon carbide side?
I'm not sure that I got the question completely. Maybe you mean regarding the slide we showed on gallium nitride growth rate in general or? Let's jump back to it. Wait a second. Here we are. What was the-
No, not the market as a whole, your bookings.
Our bookings?
Yeah.
No, I can't because bookings at IPC are zero. Gallium nitride is addressed by PSS. It's as Peter pointed out, it's addressing the area of 650 and below, right? We have an overlap in the areas of 650. IPC definitely looks into gallium nitride opportunistically because at 650, silicon carbide and gallium nitride meet, right? As of today, the applications in the industrial space are completely on silicon either or silicon carbide. No gallium nitride. Sorry, I don't know by heart the numbers of our PSS folks. Clear priority and focus of the application is here chargers, adapters and SMPS as in data centers which are not being served by IPC.
If I may.
Jungs.
If I may add, the PSS colleagues didn't give out a concrete number. Gallium nitride is way more early in the development. We now have a competitive portfolio on the market. We have high design wins and now it's about ramping and then we will come up with revenue numbers as well. As of today, it's a bit early days.
Thank you.
Thanks.
Hello. I see that some vendors are already starting to offer silicon carbide products based on eight-inch wafers. Can you please comment on the Infineon plans for going to eight-inch on for silicon carbide?
Yeah. We have a project set up developing and transferring the 6-inch technology to 8-inch. It will be put in place in our new facility in Kulim in high volume manufacturing. The initial activities already start at our R&D site in Villach. The timing-wise, we will optimize this regarding availability and of course also cost competitiveness of eight inch material. Since we rely on raw material supply, not mandatorily wafer supply, but boule supply as explained by Peter, for us it's prerequisite that from a cost perspective we come from a business case to a cost crossover, right? Not to forget that today on an area comparison, still the 6-inch wafer is more costly than the four inch wafer. Of course, due to the other productivity advantages, six inch makes sense, right?
For us now, it still takes some time until we have enough supply secured on 8-inch and then go for the transition. Technically we have first wafers and we are starting the activity, but the decision for going for high volume manufacturing is still to be made depending on the cost and availability. One important point to mention, the tools we now invest and order will have the ability to switch to 8-inch. The reusability of the equipment in Kulim will guarantee also a smooth transition to 8-inch.
Thank you.
We go to the web.
Okay, maybe a question from the web. This one is from Sandeep. What is your percentage of your SiC sets are approximately trench? I think most of it's 100%, but diodes.
The trench technology is, of course, something specific for the transistor, for the MOSFET. Therefore
Yeah.
The diode technologies are all based on our proprietary MPS system, which is not a trench. It's but also not a simple Schottky barrier diode, but in the case of transistors, it's 100% trench.
Okay. Is it Infineon's intention to lead the SiC market, and what will enable that? Does it need IFX to get the big U.S. auto customers, or what would be the way to? First question, is it our intention to become number one in SiC, as in power in general, and how can we do it?
Definitely, our self-understanding was, and is, and will be that we are a leader in silicon carbide, right? Now we can debate number 1, number 2, and number 3. I don't care, to be honest. The way to get there is definitely to provide the best products in a cost-competitive manner. I think we have proven that we are capable of doing so in the industrial space. I think the colleagues on the automotive side making great progress regarding design wins. I think I would leave it up to them to publish and announce the recent successes there. I think portfolio matters besides manufacturing capability and of course then understanding the customer needs. I'm very confident that having those growth rates shown on the industrial side, we are definitely capable to make this happen in the automotive space as well. I'm super confident that we will reach our set targets.
Okay, fine. Another one from Rob Sanders from Deutsche Bank. What is your latest view about Soitec SmartSiC technology? Soitec is sounding very confident about gaining 30% share by 2028, with the value proposition mainly through driving significant yield improvements.
Should I say something? Yeah, of course. Since we are open to any new development in the segment, we have a very detailed look into this opportunity as well. For us, it is important to understand what kind of potential value this technology from Soitec can bring. We are on the way to do that. It's not yet finished. We received material, we look at it, and we make our conclusions out of that, whether the value promised by this new technology. It is really about value, I think this is important to understand, the Soitec strategy is to sell value, not to offer something less expensive. Therefore, we need to see what kind of value this material can bring in our technology. Based on the results, yeah, we are agnostic then.
If it is a better approach, then why not switching to it? First of all, we need to prove it. That's ongoing. Maybe just to comment on that one just in principle, right? The point is about the material cost, which today is of rather higher impact for silicon carbide compared to silicon, and then of course the yield. The yield is related to the material quality. The material quality is determined by the wafer itself, and then of course, the epitaxy we do on top of it. Epitaxy we do in-house. We can also purchase for comparison purposes. We of course do both. It's the complete set, the combination cost and then performance, i.e., defect density, which translates into yield. The question is, in the end, what is the best value proposition?
What is the best package? If I go the standard way and provide standard bulk silicon carbide at efficient cost, and if I do a very sophisticated epitaxy regarding lowering the defect density, right? Then I might be able to achieve very high yields. We should not underestimate also the following that die size impacts yield because the larger the die, the more negative impact defects have because the probability is high that this kind of defect sits into your device. Therefore, also the trench technology being able to shrink the devices systematically generates higher yields. Being able to have a trench means smaller device at same performance, meaning higher yields. That is exactly the thing we look at and try to optimize in all dimensions, right? If there's a value proposition, we go for it, and if not, we don't.
Anybody from the room? Okay, then I have another one from David O'Connor. Can Peter talk about margins across SiC discrete modules? Do you need eight-inch to get to group margins for SiC? SiC margin profile industrial versus automotive.
Okay, I comment on industrial. Industrial is margin accretive, gross margin-wise, on IPC level. Therefore, we love those kind of products. We are able, of course, to allocate the volume, optimizing and increasing the margin to the extent possible. Meaning, modules and discretes must be on the same level. If not, we will allocate more volume to those who generate more margin because as we speak, we are sold out for the foreseeable future in the industrial space, it's up to us, together with the customer of course, to optimize also the margin.
Okay. I can only add, on the ATV margin, in the last earnings call, the board mentioned that it's accretive, also in automotive. We've seen great improvement and yeah. That's all I can repeat from the latest earnings call. Okay, I do not have any more questions from the web. Once again, anybody here in the room? Any follow-ups? Okay. Yeah. With that.
Thanks a lot.
Thank you very much.
... in the room for the interesting discussion. Of course, thanks a lot for all of you on the web interface.
Okay.
Bye-bye. Thanks. Bye-bye.
Thank you. Bye.