Finding opportunities after the fall in the dc/dc converter market

Finding opportunities after the fall in the dc/dc converter market

Some call it an economic slowdown while others call it the great recession. Regardless of how shrill you make it sound — we’ve all had a tough economic time this past year or two. The economic thrashing has affected the growth momentum of many technology markets including the dc/dc converter segment. However, according to Frost and Sullivan — opportunities abound for manufacturers to come out ahead.

For example, increasing power requirements and need for reliable power drive the demand for dc/dc converters. Explosive growth in the power electronics-based products for industrial, commercial, and residential uses has exacerbated the problem of power shortages. In such a scenario, electrical products are required to deliver optimal efficiency and reliability. A majority of the power electronics-based devices work on is dc power, and dc/dc converters are integral parts of a dc power supply systems. Hence, growth in these markets will nurture growth of the dc/dc converters market as well.

“Innovations in telecommunication services such as VoIP, GPRS, and the development of 3G and 4G systems and other wireless technologies have led to greater uptake of handheld and portable devices,” notes the analyst of this research service. “This has revved up consumption of dc/dc converters for such devices and equipment supporting the latest communications systems.” In addition, the rollout of technologically advanced products in the military, industrial, and medical equipment sectors has fuelled the need for high-efficiency dc power systems.

However, dealing with the effects of the prolonged slowdown has remained a major challenge for manufacturers in this space. The slump in the demand for industrial, commercial, and consumer goods coupled with the shortage of liquidity and credit has curtailed sales revenues for the dc/dc converters market. In addition, low-power dc/dc converters are becoming commoditized rather than specialized products and this has led to shrinking returns. Manufacturers are obliged to forgo margins and hence profitability in order to win bulk orders. Most tier 1 manufacturers rely on large volumes, often compromising on margins. Tier 2 and tier 3 manufacturers try to grow revenues by competing on other parameters, such as product quality, features, performance, and delivery time, or by offering niche products or custom solutions.

Going forward, the market is poised to experience an upward surge with the growing prominence of advanced architectures, including distributed power architecture (DPA) and intermediate bus architecture (IBA) as well as the gravitation toward POL converters. Improvements in digital power management and digital controls for power systems will also amplify the demand for converters. Strategic options that include joint ventures, alliances, and acquisitions will pick up steam as there is an expanding base of regional domestic companies that have been conducting significant business in these regions. Major manufacturers are currently prioritizing the emerging markets and have more active presence in the region, with direct sales, manufacturing, and service bases. “Emerging markets offer excellent opportunities, however, the potential still exists in industrialized countries,” observes the Frost and Sullivan analyst. “The rate of growth might be slower, but revenue growth can be achieved by volume growth; thus, companies need to give equal weight to both areas.” For more information, visit www.frost.com, Analysis on World DC-DC Converters Market (N6B0-01-00-00-00)