Power converter industry: the race to horizontal integration
Product Related
Renewable energy and electrification drive the market.
OUTLINE
The market value for power converters will reach US$146.1 billion by 2028, with an 8.7% CAGR 22-28.
In 2022 the industrial motor segment still represented the largest power converter market. However, the xEV power converter segment is growing substantially and is expected to become the third largest market by 2028.
As the world transitions to renewable energy sources, such as solar PV and wind power, there is a growing need for power converters that can convert energy from these sources efficiently and easier their integration with the electricity grid.
China dominates in most end markets, particularly in converter suppliers.
Increasing power density is the ultimate target.
The trend toward “electrification of everything” is significantly increasing the demand for power converters. This includes everything from electric vehicles and charging stations to industrial automation and robotics. While in 2022 the industrial motor segment still represented the largest power converter market, the xEV power converter segment is growing substantially and is expected to become the third largest market by 2028, after PV and industrial.
Hassan Cheaito, PhD.
Technology & Market Analyst at Yole Intelligence
“For instance, power converters for battery energy storage systems will feature the fastest growth in the coming five years, with a 2022-2028 CAGR of 30.3%.”
Titre du visuel
june 2021
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Thematic(s)
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Dr. Milan Rosina, PhD.
Principal Analyst for the power electronics and battery division.
“Automotive OEMs are increasingly involved in converter manufacturing to save costs and are leveraging their vertical integration,”
In this context, Yole Intelligence releases its new market & technology report: Status of the Power Converter Industry 2023. With this new power electronics study, the company, part of Yole Group, analyzes the technology, supply chain, and market trends for power converters.
This Yole Intelligence’s report highlights China’s dominant position in most end markets analyzed, particularly in converter supplier, like:
BYD, NIO and XPENG in xEV converter segment.
Gold Wind and Wind solutions in wind converter segment.
Huawei, Sungrow and Growatt in PV converter segment.
This can be attributed to three main factors:
The large domestic market for end-systems such as wind turbines, electric vehicles, and PV inverters,
The competitive advantage in terms of cost compared to regions like the USA and Europe.
The dominant position regarding the supply and the cost of raw materials.
Consequently, this has spurred innovation and alternative business approaches from non-Chinese players.
In addition, Yole Intelligence’s analysts point out the consolidation of the supply chain for high-power converters. According to this report, this supply chain is much more secured compared to the one dedicated to low power solutions. On a different strategic track, several collaborations including mergers & acquisitions, and joint ventures, are tracked, aiming for horizontal integration. By integrating different segments, companies expand their product portfolios and offer complete solutions to customers. For example, a company specializing in xEV may also provide a BESS or EV charger to offer integrated charging and energy storage solutions for electric vehicles. On the other hand, to expand the business and reduce the dependence on year-to-year market variations, there is a shift from focusing solely on system and end-system manufacturing and sales toward service-oriented organizations.
There are two noteworthy trends observed in terms of vertical integration:
Automotive OEMs are increasingly involved in converter manufacturing, and OEMs and Tier1s are moving towards manufacturing power modules and, in some cases, even power device bare dies. This trend is more prevalent in the xEV segment, where power modules and traction inverters play a crucial role in achieving technological differentiation.
There is a shift from focusing solely on system manufacturing and sales toward service-oriented businesses, explains Yole Intelligence’s analysts.
This includes services like project consulting, operation, and maintenance. This trend is particularly noticeable in established markets with a significant number of existing installations, such as rail, wind, and PV. It is also present in relatively new segments like BESS and electric vehicle DC chargers.
Power converter and end-system manufacturers are looking to increase their revenue and profit by expanding into new applications. The horizontal integration trends are driven by the synergies between different applications, and the reuse of existing know-how and products.
Vertical and horizontal integration trends have led to several acquisitions in the last 12 months. More acquisitions are expected in the coming years. The entire supply chain is looking at how to reduce the CO2 imprint to get an additional advantage against competitors.
Yole Intelligence’s power electronics team invites you to follow the technologies, related devices, applications, and markets on www.yolegroup.com.
In this regard, do not miss the presentation by Jean-Christophe Eloy, President and CEO of Yole Group during the INTERNATIONAL SEMICONDUCTOR EXECUTIVE SUMMIT EU POWER (Stresa VB, in Italy, on September 15): “GaN Investments, capacity needs & market outlook”.
Come and meet Yole Group and look through the latest market, technology, reverse engineering and reverse costing analyses.
Send us your request for an onsite meeting at events@yolegroup.com.
Hassan Cheaito, PhD. Technology & Market Analyst at Yole Intelligence“For instance, power converters for battery energy storage systems will feature the fastest growth in the coming five years, with a 2022-2028 CAGR of 30.3%.”
Dr. Milan Rosina, PhD. Principal Analyst for the power electronics and battery division.“Automotive OEMs are increasingly involved in converter manufacturing to save costs and are leveraging their vertical integration,”
