The power supply and power management IC market as a subset of the overall semiconductor market witnessed perhaps the worst year ever in semiconductor history in 2001. From 1998 to 2001 the market grew at nearly a 30% annual growth rate in worldwide shipment revenues. According to recent analysis by Venture Development Corporation (VDC), 2001 saw a 19% decline in dollar volume shipments. Average selling prices declined 14% as suppliers, distributors, and OEMs all tried to reduce their overstocked inventories. This, surprisingly, resulted in only a 5% unit volume shipment decline in 2001. The root causes for this dramatic market decline were excess inventories, over-production, declining OEM demands, and marketplace uncertainty.
The following exhibit compares 2000 with 2001 and forecasts power supply and power management IC shipments by dollar volume through 2006. The power supply and power management IC market are not expected to reach year-end 2001 revenues until 2004. Quarterly revenues may reach year 2001 levels by Q3 or Q4 of 2003.
VDC expects the dollar volume market to grow at about 4% in 2002 and to see continuing growth through 2006. The unit volume market is expected to grow at about 5% in 2002 and to see slightly higher growth through 2006 than the dollar volume market. This lower dollar volume forecast rate in 2002-2006 reflects expected erosion in average selling prices (ASPs) due to advances in technology and manufacturing efficiencies, as well as the supply and demand effects of increased production capacity - a trend which is typical of the semiconductor industry.
According to Nathan Andrews, VDC Practice Director, "2002 presents a unique opportunity for power supply and power management IC suppliers to leverage the results of a disastrous year to their individual advantage." Following are some thoughts/trends VDC believes will assist individual suppliers in recovering:
The use of commodity type products will increase in 2002 from 2001 levels. Inventories have been cleared and OEMs are back to purchasing these products. Power supply and power management IC suppliers should leverage this by focusing on distributor sales of commodity type products. Suppliers should also make sure they have the fab capacity to keep up with up-swinging commodity type product demands.
North American and Japanese sales declined so much in 2001 that 2002 is expected to see up-swings in sales in these regions. The long-term trend is away from these regions, but 2002 should see increasing sales shares.
Average selling prices dropped significantly in 2001, especially for linear regulators. Suppliers should check their pricing indexes to make sure their products are still price competitive.
OEMs are expected to start purchasing again, but with a watchful eye. Suppliers should expect to need to meet more extensive OEM demands to remain competitive.
Power supply and power management IC suppliers should look for strategic acquisitions, mergers, and/or partnerships. 2001 was a trying year for suppliers and many are in difficult financial positions and may be acquired relatively cheaply.
About the Study
This report, "The Global Market for Power Supply and Power Management Integrated Circuits, Volume 1: Product Analyses", is a multiclient study designed to provide subscribers with relevant and up-to-date market intelligence to support strategic marketing and product planning decisions. This report includes:
Forecasts by product categories, major applications, geographic regions, channels of distribution, power ratings, and standard versus custom designed ICs;
Major issues, technology trends, and OEM needs that affect the future of this market;
Discussion of the industry structure and the influences generated by the various types of participants;
Worldwide vendor shipment levels and market share data, by product categories and geographical distribution;
Detailed profiles on the leading worldwide suppliers of power supply and power management ICs; and
Recommendations providing insight into current and future market opportunities in this highly competitive marketplace.
Venture Development Corporation, a technology market research and strategy firm, was founded in 1971 by graduates of Harvard Business School and MIT. Over the years, VDC has developed and fine-tuned a unique and highly successful methodology for forecasting and analyzing dynamic technology markets. VDC has extensive experience in providing analysis in electronic components markets. This includes multiclient and custom consulting engagements in a broad spectrum of related topics including switching power supplies, uninterruptible power supplies, fuel cells, static transfer switches, and others.