Strong unit sales in the APAC region increased growth in the low voltage AC drive market during 2022 to an estimated $ 14.2 billion, according to an Interact Analysis report. This growth is heavily driven by retrofit opportunity and increased energy efficiency legislation throughout the region. Research from Interact Analysis reveals that order backlogs resulting from the Covid 19 pandemic fueled the sector over the year, while most drive manufacturers also reported price increases in 2022. However, order intake did not lead to a rise in unit sales in all cases, as supply chain problems affected the ability of some vendors to fulfill orders.

The report revealed that prices of low voltage AC drives started to increase in 2H 2021 and continued into 2022, although the global average selling price (ASP) remained flat because of the distribution of price hikes and shifts in product mix towards lower power drives. Rises in ASP were largely in the Americas (6.4 per cent) and EMEA (3.3 per cent), while prices dipped slightly in APAC (-0.5 per cent).

Meanwhile, despite extended Covid 19 shutdowns in China, unit growth and revenue growth were on par, with unit sales rising by 10.1 per cent in APAC, the largest market for drives, boosted by order backlogs and steady growth in manufacturing output of 4.4 per cent. Japan also experienced strong growth in unit sales of 4.2 per cent in 2022. However, growth in the Americas was more modest (1.8 per cent) and EMEA saw a decline, despite strong demand, as supply chain problems and the effects of the war in Ukraine (particularly on energy costs) affected manufacturing output and delivery rates.

Global semiconductor shortages continued to place strain on the low voltage drives market in 2022, affecting sales and pushing up prices of power modules to ‘staggering’ levels, where components were available at all. Some vendors were forced to turn to the grey market, with prices of certain semis soaring from $2-$3 per unit to as high as $40-$50. This led to severe price volatility and the problem looks set to continue as - despite some easing in the supply of microcontrollers - power modules remain difficult to source.

Moving toward 2027, the Americas region is expected to grow at a revenue CAGR of 2.8 per cent over the forecast period, with growth slowing as pricing moderates and the trend towards decentralised drive solutions accelerates. APAC is forecast to see a significant slowdown in growth during 2023 as order backlogs dry up, but a rise in average selling prices caused by demand for premium features looks set to pick up in 2023 and 2024, resulting in revenue CAGR of 4.0 per cent through to 2027. EMEA is predicted to experience a revenue CAGR of 2.2 per cent, with growth in 2023 largely the result of price increases. Unit shipments are expected to contract by -4.1 per cent over the year because of the ongoing European energy crisis and declining order backlogs.

Brianna Jackson, Research Analyst at Interact Analysis, commented, “Moving into 2023, we forecast an increase in the global ASP of drives, pushed up by an anticipated 7.3 per cent in EMEA as a result of the war in Ukraine and a slight (0.4 per cent) increase in APAC prices from rising demand for drives with premium features. Compared with the last edition of the report, our outlook on pricing has changed, with price increases persisting in 2022 and stabilisation now expected to be some way of off in certain regions, as supply chain problems and semiconductor shortages continue. Our estimates of drive unit shipments, meanwhile, have been revised downwards to reflect a more realistic drive-to-motor attachment rate and a noted change in product mix.”

Courtesy: Interact Analysis