Several “unrelated and some unexpected culprits” have conspired to torpedo expectations for growth this year in the worldwide DC-DC converter module market, say experts at the Darnell Group market research firm in Corona, Calif.
The DC-DC converter module market is now projected to grow significantly less than anticipated just one year ago, Darnell Group officials say in their analysis entitled “DC-DC Converter Modules and ICs,” which details conditions that have conspired to “kill” growth in the DC-DC modules market.
Those same culprits cast a pall on future growth prospects for this once dynamic market, Darnell Group officials say. The report also highlights remaining opportunities for growth and projects future trends.
“The anticipated 12.5 percent revenue shortfall cannot be explained by declining unit sales,” explains Linnea Brush, senior analyst at the Darnell Group. “The real damage to the market has resulted from the rapid erosion in pricing driven by a number of unrelated, and some unexpected, culprits.”
Darnell analysts say unit sales for DC-DC converter modules have been almost flat, which caused analysts to reduce their previous 2006 worldwide forecast from 104.3 million to 102 million units-a reduction of 2 percent, Brush says.
Looking outside the traditional modules market, growing competition is coming from semiconductor makers. Power management ICs and “hybrid” products recently have reached a higher-current “node” and are encroaching on territory that had been the exclusive purview of modules.
As a result, module makers have had to trim margins in order to remain competitive. Another potential culprit is the rapid maturing of the Intermediate Bus Architecture (IBA), which once drove sales of DC-DC converters, but unit growth has flattened out. The leveling off of the IBA, combined with rapid price declines, also will decrease revenue potential for modules, analysts say.
Further complicating matters is the changing competitive environment in the modules market. For example, Delta Electronics in Taiwan recently brought its competitive, AC-DC power supply pricing model to the DC-DC module world.
Mergers such as Emerson and Artesyn will simply reinforce these pricing pressures, Darnell experts say. These current business factors, combined with external economic culprits, are expected to contribute to lower DC-DC converter revenues over the next few years.
External suspects include higher interest rates, the recent housing bubbles in North America and Europe, and even slower growth in China. As a result, the worldwide, five-year compound annual growth rate for DC-DC converter module dollar sales was decreased from 10.5 percent in the previous report to 8.6 percent in the current report. This is supported by applications such as servers, which have experienced eight consecutive quarters of declining growth rates.
For more information contact the Darnell Group online at www.darnell.com/consulting/study.php?mc_id=1
