Switching power supplies

China’s position in the global switching power supply market remains solid. Customs data reveals that it currently produces 80 percent of the world’s shipments of switching power supplies and will likely maintain its lead with export volumes on a steady rise. Makers expect at least 20 percent annual growth in the region even as the global switching power supply industry starts to slow down. China’s export volume is forecast to exceed 300 million units by 2010.

Switching power supplies from China are mainly targeted at consumer electronic, PC and communication applications—the industry’s main growth drivers. These markets may be heading toward saturation, but makers in China are banking on continuous product upgrades and replacement to sustain demand for switching power supplies. As an added market boost, suppliers are looking to implementing large-scale production, supporting further product development and exploring new markets.

China makers focus on the low-end and midrange markets. Current supply includes wall-mount and desktop switching power AC/DC adapters for application in consumer electronics and IT products, and industrial-use switching power supplies. The region’s output of industrial power supplies consists of open-frame and DIN rail types, with 66 percent and 34 percent production share, respectively. Although less developed than other sector applications, industrial switching supplies hold promise with a projected 20 percent growth in the next two years. This is due to growing demand from an expanded market that now has 3G wireless base stations in addition to traditional electric railway, electric power and industrial instrumentation applications. However, only one of China’s top four players in the switching power supply line, Aerospace Changfeng Chaoyang Power Co., is currently engaged in active development and production.

The European Union, the United States and Asia are China makers’ major export markets. Decreased orders arising from the global economic crisis has forced many small exporters to exit, but larger players are snatching this opportunity to close in on the market left open by reduced competition. Furthermore, they are targeting the non-price-sensitive segment to secure profit margins through quality-enhanced product offerings.

Among the companies that are taking this approach are Shenzhen Moso Power Supply Technology Co. Ltd and Shenzhen Fujia Appliance Co. Ltd. Shenzhen Moso, whose Moso brand is among China’s top 10 brands in power supplies, is exploring new customers in Europe and the US to offset lower order volumes from existing clients in these regions. The company expects this to boost its orders by at least a 26 percent in 2009. Shenzhen Fujia is tapping into the India market and projects a 20 to 30 percent rise in export value this year.

Slowing global economy notwithstanding, makers are positive about rising demand, albeit in lower growth rates. The China government’s efforts to keep the economy afloat through lower interest rates and manufacturing cost as well as stronger domestic market contribute to energizing the industry.
Makers explore new applications
Power output, efficiency dictate pricing trends
Low-end, midrange products dominate supply
Makers beef up production to broaden profit margin
Energy efficiency drives development trend
PC, LCD TV/monitor markets boost product line

China makers of switching power supplies are exploring new applications to expand their consumer electronic, PC and communication application bases and widen profit margins. These industries are rife with competition that makers said even a 5 to 10 percent gain is very difficult to achieve.

Makers continue to emphasize high efficiency, improved anti-EMI performance, low noise, high reliability, wide output range, high frequency and intelligent control. In terms of design, modularity, weight and compactness considerations are highlighted. Generally, most makers invest 5 percent of their sales revenue in product development. Large companies complement their product development efforts by setting up laboratories, acquiring advanced testing equipment or forming cooperation agreements with research institutes or universities.

Product innovations are mostly driven by the need to support computer and communication requirements. To increase efficiency and reduce EMI, for instance, more makers use zero voltage switching or zero current switching technology, synchronous rectifier technology and high-power full bridge converter technology. Suppliers use ICs that integrate power factor correction (PFC) and pulse width modulation (PWM) technologies. The MCUs adopted are able to control current sharing, circuit protection and signal monitoring.

Some suppliers such as Shenzhen Moso are actively developing products with higher efficiency and power saving capability. The company’s power supplies for the LED industry have a maximum power of 300W, an efficiency of more than 95 percent and a power factor of 0.99. The product line boasts thermal protection, thunder protection and compensation function, and meets the IP67 rating. Shenzhen Moso has set up its own academy dedicated to product research and a radiation lab for EMI testing.

Shenzhen Meikai Electronics Co. Ltd has released a new type of PC power supply, the BPC or Brainpower Personal Computer Supervise System. Integrating various software and hardware technologies such as inverter power supply technology, communication interconnection technology, PC power supply technology and single-chip controlling technology, the product auto reverts to its status before power breakdown.

The main materials and components used in power supplies are the ICs, transformers, capacitors, PCBs and plastic, which combined account for 70 to 80 percent of the total cost. Labor cost accounts for 10 to 15 percent.

Although all of these are factored into makers’ pricing decisions, the unit‘s power output and efficiency are what mainly determine its price. These features depend ultimately on the intended application, IC used and safety certifications. In general, the price of a power supply for military application is up to three times higher than that for industrial or commercial use.

China makers’ main IC suppliers are Fairchild, Texas Instruments, ON Semi, STMicroelectronics, Power Integrations and Infineon. Suppliers’ choice of where to source their ICs depends on buyers’ preference. For raw materials, companies tap into the abundant local supply.

Makers differ in their price forecasts for H1 2009 due to fluctuations in raw material costs and market developments in 2008.

Export prices rose by about 10 percent last year as makers bore the brunt of the appreciating yuan, rising material cost and higher labor wages. Copper rose from $7,350 to $9,700 per ton, and labor cost jumped by 17.6 percent in Shenzhen and by 20 percent outside the special economic zone.

Production costs started stabilizing in late 2008 along with a steadier yuan and the lower cost of copper and crude oil. Copper prices dived to $3,823 per ton in October, its lowest point in three years. Barring any sudden spike in the cost of materials and components, some companies, such as Shenzhen Fujia, plan to keep their prices steady in the months ahead. A few companies will adjust their export quotes based on material and component cost adjustments.

Small manufacturers make up 90 percent of China’s switching power supply industry, a reflection of the region’s focus on low-end and midrange products. The high technology threshold and huge production investment at the high end have kept most makers in China at bay, leaving this sector to foreign and large players.

Small companies typically pursue chargers and adapters as their core products. These makers generate less than $15 million in annual sales. Medium-scale suppliers run the scale of $15 million to $75 million, and large players top the $75 million mark.

The common production processes for switching power supplies are as follows: IQC, SMT, PTH, soldering, in circuit testing, initial and regulation testing, wire testing, ATE testing, shell assembly, burn-in testing, short circuit testing, vibration testing, high voltage testing, ATE, full inspection, label pasting, packaging, and sample checking prior to shipment.

In addition to sales, in-house manufacturing capability differentiates manufacturers. Large operations handle all processes in-house, boasting facilities for injection, molding and SMT. Many of these companies produce their main components, such as transformers, choke coils and plugs, which allows them greater control over product quality and delivery. In contrast, small manufacturers subcontract SMT and focus on in-house final assembly due to the high cost of an SMT line. A wave flow soldering machine, for instance, costs at least $800,000. In terms of QC, small makers typically limit their output to one-time testing using an ATE and shorted burn-in test time. Moreover, only sample products are made to undergo aging and vibration tests.

Regardless of QC level, however, China makers prioritize product safety quality and have the capability to meet different standards in different regions, which include UL, cUL, GS, CE, CB, 3C, SAA, BS, EK, PSE, TÜV and FCC. Companies also comply with customers’ request for compliance with energy saving and environment protection measures such as those set by the California Energy Commission, the US Environmental Protection Agency’s Energy Star Program and Europe’s Energy Using Products directive. For some makers, added cost is no object in securing more safety approvals as a standard procedure for all their products.

China suppliers are looking to boost thinning profit margins through large-scale production, new export markets and new product development. These plans makers are complementing with capacity expansion projects despite a high capacity utilization of 80 percent on average. Large players, in particular, are sustaining their capacity buildup initiated in the early part of 2008. Some makers expand their capacity through new plants or automatic equipment.

Shenzhen Moso, for instance, bought a 67,000sqm land in Huiyang, Huizhou, in Guangdong province in H1 2008 and invested more than $7.5 million for the construction of a factory dedicated to LED power supply and high-end product manufacturing. The first phase of plant operations was initiated in December 2008. The company entered the LED-based field in early 2007, when demand for the product started to pick up, while maintaining other production lines for switching power supplies for IT, consumer electronic, household appliance, medical and vehicle applications.

Shenzhen Fujia will increase its monthly production capacity from 1.2 million units in 2008 to 1.5 million units in 2009. The company plans to purchase a new wave flow machine for higher production efficiency.

Suppliers, especially those serving the consumer-based segments, make up for their smaller manufacturing capacity through fast feedback and shorter delivery time.

Energy efficiency is a major development trend among Hong Kong suppliers of both internal and external switching power supplies. Many of the latest, top-of-the-line releases are designed to comply with stringent energy efficiency regulations, such as the Energy Star version 2.0, California Energy Commission and Energy Independence and Security Act of 2007 in the US; the EuP directive in Europe; and the Minimum Energy Performance Standards in Australia. Compliance with these directives is a priority as nonconformity could disqualify their products from key markets. The regulations mandate minimum efficiency levels in power supply products, compelling many makers to redesign and improve the complexity of their switching power supplies to attain—even surpass—requirements based on regulations.

In the area of external switching power supplies, the latest releases support wider power ranges. High-end models feature multiple output voltages and changeable input and/or output plugs. Some models include DC/DC converters for in-car and in-plane use. Due to the ubiquity of USB-powered devices, some new models also include USB support. Most entry-level units come with the required safety approvals, but without extra features to lower costs.

Add-on features mostly enhance the products’ safety aspects. These include short-circuit, thermal and overload protection. Some companies incorporate an isolating transformer and limit the power source to reduce the risks of fire and electric shock.

For benchtop, rail-mount and other professional-grade switching power supplies, microcontroller integration, multivoltage output and remote programming are the prevailing trends. The introduction of network connectivity has allowed multiple units to be controlled by a single supervisor over one computer. On-site supervision is also being made easier as makers add to the number of monitoring aids for checking key information such as current, voltage and temperature status. Digital displays are being added to the front panels, usually coexisting with analog and LED indicators, as well as auditory alarms.

In terms of design, the main themes in external switching power supplies are portability, slim form factor, cool colors and curvy shapes. Glossy white is a popular alternative to the omnipresent black and gray. Some suppliers have been paying more attention to exterior design to entice users to pair them with their trendy gadgets.

Hong Kong ships more than 700 million power supply products and components annually. Switching power supplies are among the region’s high-value products, with about 20 suppliers offering internal, external and professional-grade models. Production activities are mostly carried out in mainland China, Guangdong province in particular.

Taiwan’s power supply industry enjoys a 10 percent annual growth, buoyed by healthy competition, steady technology improvement and wide applications. The major driver is the PC market, which is opening up more opportunities in the high power subsector due to the increasingly visual requirements of new software such as Windows Vista. The second largest growth driver for power supplies is the LCD TV/monitor line, followed by the telecom and consumer electronic segments. The Taiwan industry also serves niche markets such as the medical, industrial instrumentation, aerospace and defense sectors.

The wide application base for switching power supplies assures Taiwan’s industry of steady growth in the years to come, makers said. Nevertheless, suppliers are boosting the positioning of their products through stronger focus on high power, high efficiency and ecofriendliness. These are all in keeping with worldwide safety and quality standards. At least for the PC market, attention is increasing on the US government-initiated 80 PLUS Program aimed at achieving AC/DC switching efficiency rate of more than 80 percent for effective power saving. Makers see this consideration to be the next standard in the next three to five years.

Taiwan has about 100 makers in the power supply line. Among the active players are Acbel Polytech Inc., Delta Electronics Inc., FSP Group, LiteOn Technology Corp., Mean Well Enterprises Co. Ltd, Topower Group and Zippy Technology Corp.

FSP, the sixth largest power supply vendor in the world, offers PC power supplies, LCD TV power supplies, power adapters, power inverters and industrial PC power supplies. Its latest Epsilon 80PLUS Series for PCs come in 450W, 500W, 600W and 700W models that meet the 80 PLUS standard. The units have environmental power supply units with active power factor correction.

Companies such as Mean Well address mainly industrial applications. The maker’s switching power supplies, open-frame switching power supplies and external power supplies are designed for automation, panel moving site, central office equipment and LED lighting devices. The latest releases from Mean Well have IP64 to IP67 ratings. The models in the GLN and PLN series, which best suite LED lighting in outdoor or harsh environments, have active PFC and comply with the EN61000-3-2 Class C standard.