Chinese market for low voltage AC and DC motor drives

According to a recent IMS Research study, The Chinese Market for Low Voltage Motor Drives - 2012 Edition, revenue growth in this market slowed considerably in 2011 from an abnormally high 2010. Revenues from motor drives (excluding software and services) are projected to grow at a compound annual growth rate (CAGR) of 13.7 percent from 2010 to 2015.

Wilmer Zhou: Author

The total Chinese market for low-voltage AC & DC motor drives (including software and services) was estimated at $2.68 billion in 2010. The Chinese Government’s RMB 4000 billion stimulation policy and other domestic consumption policies enabled healthy growth in the market to continue from 2009 to 2010.

“In the first half of 2011, the markets for low-voltage drives were still growing strongly. In the second half of 2011, as the Chinese Government tightened monetary policies and imposed strict lending conditions; this caused delays in numerous large projects, such as high-speed railways, city metros, highways, and factory renovation projects. These policies are also causing financial strain for both end users and machine builders”, commented Wilmer Zhou, senior analyst and report author. In June 2011, the market went into a precipitous decline. The bad news first came from local small and medium machine builders in South and East China; many reported no new orders during the second half of the year and many small machine builders went bankrupt and closed. The low-voltage motor drive market has been more affected than that for the medium-voltage drives, because of its greater dependence on machine builders. Nevertheless, with $3.1 billion in revenues in 2011, China still accounted for 25 percent of the world market for low-voltage motor drives.

The new report found that ABB and Siemens were the market leaders in the Chinese low-voltage motor-drive market in 2011, with 16 percent and 13 percent share respectively. Market leadership is concentrated, as the top five suppliers accounted for nearly 46 percent of the total. However, there is a large tail of suppliers, each with less than 1 percent of the total revenues. Wilmer states, “Because of the Japanese earthquake, component shortages, and other reasons such as the appreciation of the Japanese Yen in 2011, European and local Chinese suppliers are taking share from several Japanese suppliers.”

Growth in the Chinese market will continue, because of implementation of policies regarding motor efficiency and energy-saving renovations in various industries. But market growth will be at a lower rate than in the past few years as investment is reduced in the near future, with concerns over high inflation in China.

Industrial PC & terminal market growth nosedives!

The latest industrial PC (IPC) and operator terminal quarterly market tracker results from IMS Research clearly show a year-on-year slowdown in revenue growth throughout 2011.

Click pic to read graph

The 2011 fourth quarter results for both trackers, based on reported data from vendors, were published earlier this week. They show a nosedive in year-on-year quarterly revenue growth rates during the course of 2011. The year-on-year and quarter-on-quarter revenue growth profiles for the world IPC and operator terminal markets are shown in Figure 1.

The fourth quarter results show that IPC and operator terminal revenues peaked mid-2011. World revenues declined in the fourth quarter for IPCs; and in the third and fourth quarters for operator terminals.

After a strong bounce-back in 2010 from the recession, quarter-on-quarter revenue growth in 2011 slowed significantly, or revenues even contracted. IPC and operator terminal revenues were estimated to have declined in the fourth quarter by 4% and 8% respectively.

Overall, 2011 was a good year for both markets, largely due to strong results in the middle two quarters. The latest annual revenue estimates generated by the tracker show world growth of over 16% for IPCs and 14% for operator terminals.

In 2011, of the three major regions, the Americas had the best estimated year-on-year quarterly revenue growth rates. Fourth quarter revenue growth of 14% and 8% for operator terminals and IPCs respectively helped to lessen the impact of the poorer EMEA and Asia-Pacific results on the world figures.

It is possible that recovery from the recession so far has been slower in the Americas than in EMEA or Asia Pacific. Though growth in the latter two markets is now slowing, the market in the Americas is still showing strong growth. The strong performance of the automotive sector, particularly towards the end of 2011, will have helped IPC and operator terminal revenues in the Americas to continue to grow quarter by quarter.

It is safe to suggest that at a world level, given the general downward revenue growth trend of both trackers, first-half revenues for 2012 are likely to be less than in 2011; as both markets start to stabilize after the events of 2009.