The Asia Pacific variable frequency drives (VFD) market (hereafter referred to as the market studied) occupied the largest market share of 41.68%, and it is expected to witness the highest CAGR of 6.5% over the forecast period (2021 - 2026)
- The Variable Frequency Drives used to monitor the speed of motors have gained significant traction due to their ability to optimize energy usage in various industries. Not only energy efficiency but the popularity of VFDs can also be attributed to their capacity to increase motor life and further reduce the maintenance of motor by allowing it distributed use across the life-cycle, relieving it from constant use under the same parameters.
- Increased investments from several VFD vendors (especially in R&D) have allowed them to further the technology and prompt the growth of the variable frequency drives market. The investment in the Asia-Pacific region has been higher, owing to the opportunities arising from relatively higher infrastructure and economic development in the region.
- Rapid technological advancement has led to higher acceptability of the drives in several industries. The advances are focused on high reliability and reduced energy costs which can potentially reduce the per square foot energy by 30-40% when equipped with motor-driven systems in commercial buildings.
- Additionally, the advanced and modern drives integrate the networking and diagnostic capabilities into better performance and increased productivity. Intelligent motor control, energy savings, and reduction of peak-current drawn are some of the major reasons to choose a VFD as the controller in every motor-driven system.
- For heating, ventilation, and air-conditioning systems used in the commercial and industrial sector, the Variable Frequency Drives find wide usage as they can handle the variable load in several components, like chillers. The VFD helps allow peak capacity to meet the high demands of peak loads in constant flow HVAC systems and then slowly control the energy with decreasing need for the load.
- The COVID-19 outbreak had an unprecedented impact on the studied market, with several end-user industries that deploy variable frequency drives facing several difficulties. The industries were riddled with nationwide lockdowns, which brought them to a standstill. The pandemic led to supply chain disruptions and the manufacturing of Variable Frequency Drives creating difficulties for the vendors to run optimum production. Furthermore, the nationwide lockdown across countries resulted in the shutting down of operations. The pandemic also led to the closing of borders which made imports and exports of parts and the integration of the products at the installation site a challenge.
Key Market Trends
Food Processing segment to hold biggest operating expense
The use of VFDs on food processing systems and equipment such as conveyors, pumps, mixers, compressors, and other equipment not only saves the energy, but by precisely controlling motor speed, it enables the fine-tuning and precise control of food preparation, transfer, and packaging processes.
The food processing industry in the region, especially in Southeast Asia, expects to boost the demand for variable frequency drive market throughout the forecast period. The factors that drive the Southeast Asia market include an increase in demand for processed quality food and a rise in consumer concerns over the safety of food products.
Pumps of multiple kinds are ubiquitous for propelling ingredients, semi-finished or finished products, sanitation water, and other fluids. The power consumption of these pumps can be kept low through various strategies, starting from simple maintenance to sophisticated energy-saving designs. Most of the manufacturers oversize the pressure capabilities of the pump and intentionally opt for longevity over efficiency.
Centrifugal pumps are used to move liquid with an impeller, a bladed rotating wheel that propels liquid out an aperture. These are the most common type of pumps in the industry. In food and beverage plants, they are often used with water or fluids that flow like water. According to the estimates, most of the centrifugal pumps have a capacity of at least 20%-30%. This leads to great inefficiency, and the industrial pump’s efficiency is about 40%.
Additionally, many bakeries still rely on the flashing warning lights and blaring horns for signaling the maintenance crew to jump into the action and figure out what is gone wrong after production comes to a grinding halt. However, today’s ingredient handling systems are often applying for advances in digital detection to pinpoint potential problems remotely.
In the Asia Pacific region, the integration of variable frequency drives in varied food processes has proven to decrease energy consumption levels. Therefore, this factor will help the variable frequency drive market to record exponential growth across the assessment period. The growth in the food processing industry has provided opportunities for new players to enter the market with innovative products offering higher output and better results.
China to hold significant market share
The variable-frequency drive market is anticipated to hold a significant share in China, owing to the increasing operations primarily across power generation and the oil and gas industry, along with bold spending towards the establishment of manufacturing facilities.
- China's focus on infrastructural expansion has translated into FDI in numerous manufacturing and industrial sectors. Active backing from the Chinese Government has empowered accommodation of a higher number of value-addition industries, transforming into overall industry growth that includes several Chinese industrial sectors such as wind and solar power, telecommunications, automotive, petrochemical processing, and steel productions, among the top contributors to the progress of its economy. Therefore, they exhibit the highest impact on the demand for variable frequency drives. As a result, China continues to be the most worthwhile market for VFDs.
- Furthermore, the country started Made in China 2025 program, a government initiative to upgrade the country's industry from low-cost mass production to higher value-added advanced manufacturing. Through this program, the Chinese Government aims to produce 1 million electric and plug-in hybrid cars in China by 2020, with national production accounting for at least 70% of the country's market share.
- The variable frequency drive also needs to change according to market changes, like in control precision, efficiency, size, environmental tolerance, etc. China's policies to support the manufacturing of new energy, new energy, automobiles, and high-tech equipment will create enormous demand for variable frequency drives.
- China VFD suppliers focused on the low-end technology level among the global markets. Late starting and lack of technological innovations make China VFDs at a backfoot position in competition with foreign VFDs, predominantly in the steel industry, rail transportation, and other verticals that require high technical requirements, thereby impeding the domestic inverter drives growth.
- The rapidly growing market for HVAC/AC equipment is significantly contributing to the growth of the market studied. According to IEA, China produces around 70% of the world's room air conditioners and covers about 22% of installed cooling capacity worldwide.
The Asia Pacific Variable Frequency Drives Market is fragmented due to the presence of players such as Eaton Corporation, ABB Ltd, Crompton Greaves, General Electric Compnay, and Honeywell International Inc. Companies are investing in R&D and driving towards improving the market.
- Feb 2020 - GE Renewable Energy booked a contract with Angat Hydropower Corporation to rehabilitate the 218 MW Angat hydropower plant located in the Philippines. Angat hydropower facility supplies more than 90% of Metro Manila's potable water needs and supports the irrigation of 25,000 hectares of farmlands in Bulacan and Pampanga.
- June 2021 - Power management company Eaton announced it had completed the acquisition of a 50 percent stake in Jiangsu YiNeng Electric's busway business, which manufactures and markets busway products in China. The combination of YiNeng's busway capabilities and strong presence in China with Eaton's broad power distribution and power quality portfolio enables the company to expand packaged solutions that meet the needs of customers in the Asia-Pacific region.
- Aug 2021 - Hitachi acquired the Thales ground transportation systems business, creating opportunities and expansions of core business in new markets and also for GTS customers. The combination of Hitachi and GTS digital expertise helps accelerate Hitachi's Mobility as a Service offering a global customer base.
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Table of Contents
1.2 Scope of the Study
4.2 Value Chain / Supply Chain Analysis
4.3 Porters 5 Force Analysis
4.3.1 Threat of New Entrants
4.3.2 Bargaining Power of Buyers
4.3.3 Bargaining Power of Suppliers
4.3.4 Threat of Substitute Products
4.3.5 Intensity of Competitive Rivalry
4.4 Assessment of the Impact of COVID-19 on the Market
5.1.1 AC Drivers
5.1.2 DC Drivers
6.2 Market Restraints
7.1.1 Low Voltage
7.1.2 Medium Voltage
7.2 By End-User Industry
7.2.1 Oil and Gas
7.2.2 Food Processing
7.2.3 Energy and Power
7.2.4 Water and Wastewater Management
7.2.5 Pulp and Paper
7.2.6 Other End User Industries
7.3 By Country
7.3.4 Rest of Asia Pacific
8.1.1 Eaton Corporation
8.1.2 ABB Ltd (GE Industrial)
8.1.3 Crompton Greaves
8.1.4 General Electric Company
8.1.5 Honeywell International Inc.
8.1.6 Rockwell Automation Inc.
8.1.7 Hitachi Group
8.1.8 Siemens AG
8.1.9 Mitsubishi Corporation
8.1.10 Toshiba Corporation
8.1.11 Schneider Electric Company
8.1.12 Johnson Controls
8.1.13 Emerson Electric Company