Mainland China and Taiwan UPS manufacturers are keeping up with the increasing global demand for low-power UPS systems, as well as high-power, value-added units for industrial applications. Most are established suppliers of storage batteries, transformers and other power supplies before venturing in the UPS line.
About 100 makers of UPS systems in mainland China specialize in low-power, entry-level systems, while Taiwan's supplier base of 50 manufacturers concentrates on medium-to high-power online UPS systems.
In 2004, surveyed makers in mainland China and Taiwan shipped 30 percent and 80 percent of their output, respectively, as OEM orders and own-brand UPS systems. These shipments are mostly UPS systems with less than 5KVA power rating for SOHO and small enterprise markets.
The surveyed mainland China makers expect to increase UPS revenue by 71 percent to a combined sales of $138.4 million. If the projection is met, they will account for about 2.1 percent of global UPS sales in 2005.
Taiwan, on the other hand, expects a modest 25 percent increase, or $313.4 million, for its 2005 sales revenue. The expected revenue is forecast to account for 6.1 percent of global UPS sales.
OEM and Own-Brand Business
• Mainland China makers are clustered in the Guangdong cities of Dongguan, Foshan, Zhongshan, Shenzhen and Guangzhou. Other makers are based in Shanghai, Jiangsu, Zhejiang, Hubei, Shaanxi, Sichuan and Beijing. Fifty percent of the mainland's UPS exports originate from Guangdong.
• Taiwan makers maintain facilities both in mainland China and on the island. Low-end UPS systems are made on the mainland, while R&D and production of high-end models are carried out in Taiwan factories.
Capacity Utilization
• Surveyed mainland China makers have a combined monthly capacity of more than 35 million UPS systems; only 22 percent of capacity, or about 8 million units, is utilized.
• Taiwan UPS makers have a combined monthly output of 387,000 UPS systems. However, only 58 percent of capacity is actually used, or 162,500 UPS systems per month.
Production Capability and QC
• Mainland China makers outsource capital-intensive processes such as SMT, plastic injection and PCB making
• Both Taiwan and mainland China UPS makers make large annual investments in testing equipment and aging testing rooms.
• Ten percent to 20 percent of the surveyed companies' total workforce are QC technicians.
OEM and Own-Brand Business
• Greater China UPS suppliers' customers are a healthy mix of OEM and ODM buyers, and those who purchase the makers' brands.
• Sixty-one percent of the mainland China companies depend on OEM orders for the bulk of their revenue.
• Thirteen of the 16 surveyed Taiwan companies generate less than 40 percent of their total sales revenue from OEM orders.
Industry Overview
Demand for power protection devices is increasing. Industry analyst Frost & Sullivan projected that revenues in the uninterruptible power supply (UPS) industry will steadily improve and reach US$326 billion by 2009. Initially in demand only in the personal computer (PC) sector, UPS systems are now widely used in other segments, including telecom, finance, hospitals and medical devices, manufacturing, small and medium enterprises and security/access control systems in both the public and private sectors.
Niche applications are creating growth in the UPS market. Even homeowners are beginning to invest in power protection devices to safeguard their home entertainment equipment in case of a power outage. This has opened the home-entertainment channel to UPS distributors for the first time.
The technical standards for UPS systems, especially for 5KVA and below units, are well established. The performance specifications of many makers' products are indistinguishable, and UPS suppliers are now competing on price, availability and support. All of these factors are helping suppliers branch out into new markets.
As applications such as voice-over-IP and Power-over-Ethernet take hold in the small-to-medium business space, companies are looking to scale up their power protection products, giving vendors and resellers another revenue stream and a way of offering better-value product bundles.
Growth in the server market has also been flowing into UPS sales. The trend of server consolidation is compelling companies to install more mid- to large-sized UPS systems.
IT initiatives by the government and widening network of ATMs are also driving the demand for UPS. For example, preparations for the Beijing Olympics have significantly boosted demand for UPS systems in the public sector in mainland China.
The increase of service providers in the telecom sector also contributes to the uptrend. These service providers are expected to continue to invest in network infrastructure, which includes UPS for critical equipment.
Supplier Profile
Cell Power Co. Ltd
Cell Power Co. Ltd is a Taiwan UPS manufacturer established in 1979. It specializes in production of UPS systems and automatic voltage regulators (AVRs).
Sales of UPS systems account for almost 90 percent of the company's annual revenues. Sales of all products reached $6.6 million in 2004, with sales of UPS systems at $5.9 million. In 2005, the company expects about $6.5 million in UPS sales revenue.
Cell Power's current product range includes online and line-interactive UPS systems. It has stopped producing offline UPS systems. All of Cell Power's output consists of own-brand products.
The company is capable of producing online UPS systems with a power rating of up to 400KVA. Since it branched out into this type of product, Cell Power saw its client base grow from PC users to include high-tech enterprises, military, oil refineries, hospitals, and government facilities. Cell Power's key customers include semiconductor manufacturers and optoelectronic companies.
Among its products, line-interactive UPS systems are the most popular models. In 2004, the company had an average monthly output of 3,700 UPS systems, of which line-interactive models accounted for 3,000 units.
Headquartered in Chungho, Taipei, Cell Power houses its sales department, R&D department and manufacturing workshops in Taoyuan. The company has a total of 60 employees. The company has also established a branch office in Malaysia and a liaison office in mainland China.
Cell Power exports 45 percent of output. Its major export markets are Southeast Asia and Africa, which account for 18 percent and 15.3 percent of total sales, respectively. The North American market absorbs 6.3 percent of exports. Cell Power also ships its products to the Middle East and Europe.
To survive intense competition among UPS makers, Cell Power has also developed other power management devices such as automatic voltage regulators and line surge protectors.
The company projects that by the end of 2005, sales of UPS will account for 80 percent, while AVRs and other devices will account for 20 percent of total sales.
Manufacturing Capability
Cell Power has one factory located in Taoyuan, Taiwan. The factory occupies a total area of 993 square meters. It is equipped with four production lines, two for large UPS systems and two for small UPS systems. The company's products are shipped via Keelung port in Taiwan.
Cell Power has a monthly capacity of 4,100 units. At present, about 95 percent of production capacity is utilized. The company also has a subcontractor in mainland China.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
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