PV inverter supplier base fragments in 2012 – Minimal impact from recent M&A activity in 2013
The supplier base for photovoltaic (PV) inverters further fragmented in 2012, with the total market share of the 10 largest suppliers falling by more than four percentage points, according to the latest quarterly report from IMS Research, now part of IHS Inc.
This was partly due to strong growth in demand from China and Japan, where most of the Top 10 largest suppliers have limited presence. SMA Solar Technology’s share of global revenue fell for the third consecutive year to slightly more than 25%—as the PV market continued to fragment and demand for its products weakened in its core markets. A flurry of recent M&A activity, including Advanced Energy’s acquisition of REFUsol and ABB’s purchase of Power-One, also has had little impact on the competitive landscape and has resulted in only minimal changes to the supplier rankings.
PV inverter supplier base fragments
Although recent bankruptcies, exits and acquisitions normally would indicate industry consolidation, the market share of the 10 largest PV inverter suppliers fell from 62% in 2011, to 56% in 2012.
SMA Solar Technology’s dominant position in the PV inverter industry slid further in 2012, when its share fell to slightly more than 25%, having stood at nearly 40% in 2009.
"The year 2012 saw many of the leading suppliers, including the three largest—SMA, Power-One and Kaco—lose market share, largely due to their limited presence in China and Japan, both of which grew rapidly in 2012," said Sam Wilkinson, PV inverter research manager at IHS. "The majority of suppliers that gained share in 2012 were mid-size companies that are targeting growing segments of the market, in contrast to the market leaders whose businesses still heavily revolved around the stagnating core markets in Europe. The number of suppliers with a market share of more than 1% increased to 24% in 2012, with this growing group of suppliers accounting for three-quarters of market revenue."
Enphase & Advanced Energy gain share amid market exits
The majority of suppliers that gained market share and moved up the rankings were those with a strong presence in fast-growing markets or those that offered new technologies. Advanced Energy and Enphase’s strong position in the fast growing U.S. market resulted in their global rankings improving to fourth and sixth, respectively in 2012, up from eighth and eleventh in 2011. Similarly, Omron’s strength in the Japanese market allowed it to gain six places and become the first Asian supplier to place in the Top-10
Conversely, three suppliers have slipped from the Top-10 ranking in 2012: Satcon, which declared bankruptcy following financial difficulties; Siemens, which withdrew from the industry citing lower growth and strong price pressure; and Sputnik Engineering, which has a strong focus on the stalling European market.
Acquisitions make little impact on supplier base
Recent weeks have seen the acquisition of a number of PV inverter suppliers. Advanced Energy’s acquisition of REFUsol, and ABB’s acquisition of Power-One both represent strong strategic moves to broaden product portfolios and gain access to both existing core and new markets. However, IHS has found that these acquisitions will have only a minimal immediate impact on the composition of the supplier base.
Despite its acquisition by ABB, Power-One’s position as the second largest supplier to the market and the distance between it and SMA remains relatively unchanged due to ABB’s share of the market being less than 1% in 2012. The acquisition by Advanced Energy of REFUsol would see the combined company gain just one place in the rankings, leapfrogging Kaco, to become the third largest supplier.
“The acquisitions do not represent a major consolidation in the industry—once the ranking tables are adjusted to allow for these changes, the combined market share of 2012’s 10 largest suppliers increases to just 59%, still less than we saw in 2011,” Wilkinson added.
Although M&A, bankruptcies and exits are causing some consolidation within certain regions, many new emerging markets, particularly China and Japan—which will be the two largest markets in 2013—bring with them a new, rapidly expanding set of local inverter suppliers and therefore the market is fragmenting on a global level.
"The end result is that these new markets are highly challenging for existing suppliers to penetrate as there is a deeply entrenched supplier base already in place. As the market continues to become more and more geographically diverse, the supplier base is likely to continue fragmenting," Wilkinson concluded.