Power Electronics

Signs Point to Communications Power Recovery

8/18/2003

Edited by PETech Staff

Signs Point to Communications Power Recovery

In January of this year, Darnell Group forecast that after yet another decline in 2002, the global communications power market was poised for a recovery in the fourth quarter of this year and was expected to grow from $4.410 million in 2003 to $5.774 million in 2008, a compound annual growth rate (CAGR) of 5.5%.

All indications are that the company’s forecast was correct.

Signs of the impending recovery are already appearing. As more users flock to data services, carriers will need to expand and upgrade their networks accordingly. Capital equipment spending is projected to begin as soon as the fourth quarter of 2003 or early 2004. Supply and demand in the equipment industry are achieving a "better balance," as spending rates by service providers approach the historical average of about 15% of their revenue, compared to 30% at the peak in 2000 and steep drop-offs in the following years. More than ever, precise targeting will be critical. In terms of geographic regions, Network Infrastructure will dominate growth in Asia and China while several other regions will see near-term growth dominated by Enterprise Equipment sales. Wireless infrastructure activity will continue to pick up in the Asia Pacific and Europe regions. The fixed-line and cellular penetration rates in China point to a significant communications equipment industry growth opportunity for years to come. In most instances, spending to provide broadband applications for the enterprise will drive Network Equipment sales while spending on computer-telephony integration (CTI) is expected to drive Enterprise Equipment sales. The Semiconductor Industry Association sees strong consumer demand for broadband services such as DSL and cable products.

As the recovery takes hold, the unit market is expected to experience a CAGR of 11.2%, from 156,600 units to 265,600 units over the period from 2003 to 2008. But growth won’t be linear going forward. Due to increasing competition and price cuts, the dollar market may still experience negative growth from 2003 to 2004, even as the unit market grows modestly during the same period. After 2004, growth in dollar sales will slowly start accelerating. In addition to forecasting the dollar and unit market growth for five power system segments (Micro, Small, Medium, Large and CO-Class), this report includes a detailed pricing model for dc power systems.

This in-depth analysis provides detailed dollar, unit and pricing forecasts of the anticipated recovery across regions and equipment segments.

For more information, visit www.darnell.com.

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