Morgan Stanley: Global Power Semiconductor Supply Tightening, Prices Expected to Rise in H2 2026
N.R. Finch
Morgan Stanley's latest sector report shows global power discrete revenue grew 16% year-on-year in April, driven by two straight years of capex cuts that are squeezing supply — but demand is splitting sharply, and whether the price rally holds depends on how industrial and EV demand diverge in the second half.
What is actually driving this price rally?
Not a demand boom — it is supply tightening. Global top-tier power discrete makers have cut capex for two consecutive years; the 2026 full-year plan calls for only a modest ~11% rebound.
This means → factories barely expanded capacity, yet orders are recovering — utilization rates got pushed to high levels almost by default.
In plain terms = the pie didn't grow much, but more people showed up to eat — prices go up.
Has Greater China already started raising prices?
Several power semiconductor companies issued price-hike notices in February this year. Distributors and most end customers have accepted the new pricing.
The one holdout: automotive IGBT — a core power chip that controls the motor in electric vehicles — customers are still on the sidelines, not yet accepting the increase.
This reflects stronger bargaining power among auto clients, and signals that carmakers lack confidence in H2 demand — they don't want to lock in prices early.
How wide is the demand split?
Industrial is strongest: top industrial-automation firms posted 21% YoY revenue growth in Q1 — the sector's biggest pillar right now.
NEVs are slowing: the three-month moving average of wholesale volumes rose just 7% YoY in May; April's growth briefly hit zero.
Solar is weakest: new installed capacity plunged 51% YoY so far this year — demand remains depressed.
This means → auto + industrial account for 72% of total power discrete demand. Industrial is carrying the load, but NEV and solar are clearly dragging.
Can the price rally last into the second half?
Morgan Stanley's verdict: it hinges on whether demand weakens sharply.
The supply-side logic is solid — capacity cannot expand quickly, so prices have a floor.
In plain terms = the case for higher prices on the supply side is hard. But if NEV and industrial demand both roll over in H2, the rally breaks. How industrial and NEV trends diverge will directly determine how long this cycle runs.
Content is for reference only, not financial advice.