# Electrical equipment and Semiconductors

Modern electrical equipment is controlled by chips: power semiconductors switch the current in inverters, drives and chargers, and microcontrollers run meters, breakers and protection relays. The 2021 chip shortage showed that a missing chip worth a few dollars can hold up delivery of switchgear and drives, while chip fabs in turn depend on precise power and control equipment.

Source page: https://www.materialinsights.org/links/electrical-equipment-and-semiconductors/

[Electrical equipment](https://www.materialinsights.org/industries/electrical_equipment/) (industry) and [Semiconductors](https://www.materialinsights.org/industries/semiconductors/) (industry): 6 relationships.

## How they are linked

### 1. Buys from

*Physical flow · ₹4.6 per ₹100 · Electrical equipment buys from Semiconductors*

Inverters, drives, smart meters, chargers and protection relays need power transistors, diodes, modules and control chips.

- **₹4.6** of every ₹100 of Electrical equipment output, all rounds (India 2022)
- **₹2.9** bought directly

The share is much higher for power electronics such as solar inverters and drives than for transformers or cables, which contain few chips. India WPI series show a link over a year (12-month correlation about 0.51) but not month to month (minus 0.17).

Sources: [OECD](https://www.oecd.org/en/data/datasets/input-output-tables.html); [Material Insights (World Bank, FRED, IMF data)](https://www.materialinsights.org/industries/semiconductors/price-links/)

### 2. Buys from

*Physical flow · ₹4.5 per ₹100 · Semiconductors buys from Electrical equipment*

Fabs and packaging plants buy power supplies, transformers, switchgear, UPS systems and motors to run very power-hungry, outage-sensitive tools.

- **₹4.5** of every ₹100 of Semiconductors output, all rounds (India 2022)
- **₹2.9** bought directly

The two flows are almost equal, an unusual two-way dependence. In the site's data the link from electrical equipment prices to chip prices passes a Granger causality test, which fits equipment being a cost for fab building and operation.

Sources: [OECD](https://www.oecd.org/en/data/datasets/input-output-tables.html); [Material Insights (World Bank, FRED, IMF data)](https://www.materialinsights.org/industries/semiconductors/price-links/)

### 3. Industry input

*Physical flow · Criticality 4 of 5 · Semiconductors to Electrical equipment*

Three enterprise types in electrical equipment depend on chips: power semiconductor and component suppliers for power chips and modules, switchgear, motor and drive makers for drive electronics, and solar inverter, battery system and smart meter makers for power and metering chips.

Power devices are often qualified for a specific product over years, so a maker cannot easily switch supplier when one is short.

Enterprise types that depend on it:

- Power semiconductor and electronic component suppliers: power chips and modules (criticality 4 of 5)
- Switchgear, motor and drive makers: drive electronics (criticality 3 of 5)
- Solar inverter, battery system and smart meter makers: power and metering chips (criticality 3 of 5)

Sources: [Material Insights](https://www.materialinsights.org/industries/electrical_equipment/)

### 4. Industry input

*Physical flow · Criticality 5 of 5 · Electrical equipment to Semiconductors*

Wafer-fab equipment makers depend on power supplies and control gear.

A brief power fault can scrap wafers in process, so fabs need high-quality, redundant electrical systems.

Enterprise types that depend on it:

- Power semiconductor and electronic component suppliers: power chips and modules (criticality 4 of 5)
- Switchgear, motor and drive makers: drive electronics (criticality 3 of 5)
- Solar inverter, battery system and smart meter makers: power and metering chips (criticality 3 of 5)

Sources: [Material Insights](https://www.materialinsights.org/industries/semiconductors/)

### 5. Chip shortage

*Shared risk · Medium · Chip supply limits equipment deliveries*

When chip supply tightens, equipment makers cannot finish products that are otherwise built, because low-cost control and power chips have long lead times and few qualified sources.

- **6 to 8%** ABB's 2021 comparable revenue growth guidance after the October cut, from just below 10%

ABB said in October 2021 that supply constraints, mainly semiconductors, delayed customer deliveries, with the impact most tangible in Electrification and in Robotics and Discrete Automation, and that customers were placing safety orders. The episode showed that order books can overstate real demand during shortages.

Sources: [ABB via Business Wire](https://www.businesswire.com/news/home/20211020006194/en)

### 6. Power electronics growth

*Transition · Rising · Electrification drives power chip demand*

Renewables, electric vehicles and industrial electrification all need power conversion, which raises demand for power devices, especially silicon carbide and gallium nitride.

- **US$ 26.2 billion** power electronics device market, 2024
- **US$ 43.3 billion** projected for 2030
- **8.7%** expected annual growth, 2024 to 2030

Yole Group names Infineon, STMicroelectronics and onsemi as the top three suppliers; silicon devices still dominate volume, but SiC and GaN are growing fastest. India's approved chip projects include silicon carbide fabs and CDIL's expansion of high-power discrete devices in Punjab, which target this market.

Sources: [DQ India (Yole Group data)](https://www.dqindia.com/esdm/power-electronics-in-flux-market-grows-leaders-shift-and-strategies-adapt-9452701); [Press Information Bureau, Government of India](https://static.pib.gov.in/WriteReadData/specificdocs/documents/2026/feb/doc202627782201.pdf)

## For investors

### Key learnings

1. Power electronics makers depend heavily on a few power-chip suppliers, so chip lead times can limit their deliveries even when demand is strong.
2. The 2021 shortage showed that safety orders can inflate order books; backlog growth during shortages is a weaker signal than usual.
3. Electrification is a steady growth market for power devices, about 8.7% a year from 2024 to 2030 by Yole's estimate, with silicon carbide and gallium nitride growing fastest.

### What to track

- **Lead times for power semiconductors and microcontrollers**: Lengthening lead times warn of delivery delays for drives, inverters and meters (Monthly · distributor lead-time reports)
- **Equipment makers' comments on supply constraints**: Show whether chip supply is holding back revenue (Quarterly · ABB, Siemens, Schneider results)
- **SiC and GaN capacity additions**: Determine supply for inverters and chargers (As announced · Infineon, STMicroelectronics, onsemi)

## For policymakers

### Key learnings

1. India's grid, solar and EV programmes need large volumes of power chips and smart-meter chips that are mostly imported, a supply risk shown in 2021.
2. Power semiconductors use mature processes, which makes them a realistic early target for Indian fabs, and approved projects include silicon carbide fabs.
3. Fabs need very reliable power, so grid quality at chip clusters is part of semiconductor policy.

### What to track

- **Imports of power semiconductors and modules**: Show dependence for solar, EV and grid equipment (Monthly · DGCI&S)
- **Progress of approved SiC and power-device projects**: Signals when domestic supply for inverters and drives begins (As announced · ISM, PIB)

## India

India imports most of the power and control chips used in its inverters, drives and smart meters; the India Semiconductor Mission's approved projects include silicon carbide fabs and CDIL's high-power discrete expansion aimed at this demand.

## Sources

1. [OECD Input-Output Tables 2025 edition, India 2022](https://www.oecd.org/en/data/datasets/input-output-tables.html), OECD
2. [Price correlation, Material Insights](https://www.materialinsights.org/industries/semiconductors/price-links/), Material Insights (World Bank, FRED, IMF data)
3. [Industry map: Electrical equipment](https://www.materialinsights.org/industries/electrical_equipment/), Material Insights (2026)
4. [Industry map: Semiconductors](https://www.materialinsights.org/industries/semiconductors/), Material Insights (2026)
5. [Power electronics in flux: market grows, leaders shift, and strategies adapt](https://www.dqindia.com/esdm/power-electronics-in-flux-market-grows-leaders-shift-and-strategies-adapt-9452701), DQ India (Yole Group data) (2025)
6. [ABB Q3 2021 results](https://www.businesswire.com/news/home/20211020006194/en), ABB via Business Wire (2021)
7. [India Semiconductor Mission backgrounder](https://static.pib.gov.in/WriteReadData/specificdocs/documents/2026/feb/doc202627782201.pdf), Press Information Bureau, Government of India (2026)