Once a rising star alongside AI chips, power semiconductors are now feeling the heat from a sluggish electric vehicle (EV) market. As EV sales growth disappoints, major manufacturers are slashing jobs, delaying investments, and facing intensifying competition — particularly from China.

Mass Layoffs and Production Cuts

Global power semiconductor giants have collectively announced over 8,800 layoffs to cut costs and adjust to weaker demand. Japan's Renesas Electronics plans to reduce less than 5% of its 21,000-strong workforce — around 1,050 jobs — while pushing back mass production at its Kofu plant, originally scheduled for early 2025. The company's factory utilization rate plunged to 30% in the last quarter of 2024, down from 40% the previous quarter.

Germany's Infineon Technologies, the world's largest power semiconductor supplier, plans to cut 1,400 jobs and relocate another 1,400 positions to lower-cost regions. Meanwhile, U.S.-based Onsemi, the second-largest player, announced 2,400 job cuts — a significant restructuring effort affecting all divisions.

STMicroelectronics, headquartered in Switzerland, is also trimming its workforce by up to 3,000 positions through early retirements. The downturn has rippled across suppliers, too — Wolfspeed, a U.S. wafer substrate manufacturer, is laying off 1,000 employees, roughly 20% of its global staff.

Even component makers are pulling back. Japan's Sanken Electric has delayed its EV power module expansion plans by two years, while Sumitomo Electric canceled plans for a new semiconductor materials plant and additional production lines at existing sites.

Chinese Competition Heats Up

While Western and Japanese firms scale back, Chinese manufacturers are ramping up. BYD, once a major customer of Renesas, began mass-producing its own EV power semiconductors in early 2024. CanSemi Technology, based in Guangdong, has also launched high-performance power semiconductor production.

With U.S. export restrictions on advanced chipmaking equipment, Chinese firms are sidestepping sanctions by acquiring unrestricted machinery — redirecting investments into power semiconductors, among other sectors. According to industry experts, Chinese manufacturers have rapidly closed the performance gap.

“Stable supply from Chinese power semiconductor makers is now a reality,” said Shinichi Aoki, an industry expert from SEMI Japan, highlighting that companies are now moving to recoup their investments.

Japanese Players Regroup Amid Tougher Market

Power semiconductors have traditionally been a strength for Japanese manufacturers, though they lag behind U.S. and European competitors in scale and financial resources.

Japan's top three players — Mitsubishi Electric, Fuji Electric, and Rohm — hold a combined 11% global market share, dwarfed by Infineon's 20%. To stay competitive, Japanese companies are joining forces to ease the financial burden of new investments.

Toshiba and Rohm plan to invest ¥380 billion ($2.54 billion) into production facilities, while Fuji Electric and Denso have earmarked ¥210 billion for expansion.

Despite these efforts, the path ahead remains challenging. The power semiconductor industry — once poised for rapid growth alongside AI chips — now faces an uphill battle to recover from oversupply, workforce cuts, and intensifying global competition.