Power market projected to have modest growth
IHS Markit projects that the merchant power supply market will continue to grow with the ac-dc non-commodity market having the most growth over the next several years.
The world market for merchant power supplies, which manufacturers sell to external companies, rose 3.9% year over year to reach $19.7 billion in 2015. Growth is expected to remain flat in 2016, before stabilizing to modest growth from 2017 to 2020.
IHS Markit forecasts that the total market will surpass $20 billion in revenue by 2017 and is projected to reach $23 billion by 2020.
The ac-dc non-commodity market is projected to be the fastest-growing market on a revenue basis from 2015 to 2020, with a compound annual growth rate (CAGR) of 9.2%. The increase will be driven by strong growth in the lighting and military and aerospace markets, in particular. In 2016 the ac-dc non-commodity market is expected to exceed the ac-dc commodity market in revenue, becoming the largest merchant power-supply market by type.
Revenue for the ac-dc commodity market peaked in 2015, as demand declined in key commodity applications. Commodity ac-dc power supplies include all high-volume, consumer-based power supplies, for example, power supplies for desktop PCs, notebooks, tablet PCs and mobile phones.
Revenue for the dc-dc converter market is estimated to have grown by almost 4% in 2015. Much of this growth was driven by the server, networking and the military and aerospace markets. Growth is predicted to slow from 2016 to 2020, as demand for some segments of end-equipment weakens such as cellular infrastructure.
Revenue decline in Asia-Pacific market
IHS Markit predicts the market in Asia-Pacific will grow much slower from 2016 to 2020 than in the other regions. This is because of Asia's established focus on commodity power supplies.
Asia-Pacific is estimated to have been the largest regional market for ac-dc power supplies in 2015. It accounted for 67.2% of revenues and 77% of units shipped. However, Asia-Pacific is expected to retain the largest revenue share for both commodity and non-commodity power supplies from 2015 to 2020. Revenue share gains projected for the Americas and EMEA will come from sales of non-commodity power supplies.
Product mix change expected to increase ASPs
Authorized service providers (ASPs) are forecast to slowly to rise as the product mix for applications changes over time, as demand softens for commodity products in compute, mobile and consumer segments from 2015 to 2020. In 2015, the percentage split between commodity and non-commodity power supplies was 91.8% and 5.7%, respectively.
LED lighting market showing signs of growth
Lighting is projected to be the fastest-growing application from 2015 to 2020. The market for merchant power supplies in lighting applications is estimated to have been worth $1.26 billion in 2015, which accounted for 6.4% of total market revenues. The lighting market for power supplies is projected to increase to $5.2 billion in 2020 as LED lighting adoption penetrates the commercial markets. Growth is being driven by demand for power adapters for LED-lighting applications, specifically LED luminaires.
The mobile devices and chargers segment is estimated to have been the largest market for ac-dc and dc-dc merchant power supplies in 2015, accounting for an estimated 30% of total revenues. This market is typically high volume, low margin. It is expected to drop to 20.6% of the market by 2020. The mobile device and charger category contains mobile phones, all tiers of smartphones, all tiers of media tablets, and battery chargers for mobile communications.
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