Increasing Power Complexity Drives Market Consolidation
-- EDN, June 7, 2007
A number of interesting developments are taking place in the dc-dc converter market. Traditionally considered one of the most dynamic segments of the power electronics industry, and driven by a number of end-user applications, the dc-dc converter market was projected to see double-digit growth over the next several years. However, due to a number of business and economic factors, the dc-dc converter market is now projected to grow at a significantly slower pace than projected in 2005. Once forecasted to exceed $3.6 billion in 2006, the worldwide dollar market for dc-dc converter modules reached approximately $3.2 billion in 2006. This 12.5% decline in projected growth is due to a number of factors, including market consolidation among the power conversion manufacturers (in terms of both companies and products) and competition from semiconductor companies.
Of particular importance to the manufacturers of power supplies is the changing competitive environment.For years considered a fragmented industry, with hundreds of participants competing for market share, the dc-dc converter industry is undergoing a market-wide consolidation.In 2005, the top five market share leaders each had a little over 4% of the worldwide dollar market. In 2006, the top two companies, Delta Electronics and Emerson (including Artesyn and Astec) make up almost 17% of the worldwide dollar market, and that number is expected to grow. As part of its expansion strategy, Delta has introduced its competitive, ac-dc power supply pricing model to the dc-dc converter market. As a result, the company has been growing at about 40% a year for the last two years. Further affecting the composition of the dc-dc converter market is the acquisition of Artesyn by Emerson. Both Artesyn and Astec are founding members of the PMBusTM working group and the Point-of-Load Alliance (POLA), and are now part of the Emerson Network Power group. Combined, they make up approximately 10% of the worldwide dc-dc converter dollar market. The acquisition of Artesyn gives Emerson a company with experience in emerging standards such as AdvancedTCA and MicroTCA.
In the non-isolated segment of the dc-dc converter market, competition is coming from the semiconductor companies. Power management ICs and “hybrid” products have recently reached a higher-current “node” and are now encroaching on territory that had until recently been the exclusive domain of modules. For example, there is now more activity by IC makers at the 5-10A range. Given this new competition, module makers have had to trim margins in order to remain competitive. As a result, the revenue gap between dedicated power supply companies and power semiconductor companies appears to have widened.
An additional driver of increased consolidation in the power supply and power converter industry is the increased focus on power efficiency and digital control. As power supplies and converter designs become more complex, the engineering and R&D funding needed to make incremental improvements increases. Since companies also want to get a higher return on investment from this spending, they employ a number of business strategies, including further acquisitions, designed to increase their sales volumes. In an attempt to do this, companies such as Emerson are actively looking for acquisitions, while other companies like C&D Technologies are actively looking to divest their power electronics division.To access other power-related articles and resources, please visit/powerspotlight.
