Our Marketplace

We continue to expand our product portfolio to grow our addressable market and provide more products to our key customers where we are already an approved or preferred supplier.

DRIVING SUSTAINABLE GROWTH BY GROWING OUR ADDRESSABLE MARKET

GLOBAL POWER CONVERTER MARKET

A highly diverse market gives us an opportunity to grow market share

Overview

Our end markets can be broken down to the low voltage market – principally powering electronic systems and the high voltage and radio frequency (RF) market – which powers processes such as the generation of plasmas or some sort of particle acceleration or ionisation. The fragmented nature of the market means we have numerous competitors dependent on the product type, end application or geographic location with no one competitor having a dominant share. We consider that we have strong relationships with the leading customers in the higher growth market niches, which will allow us to continue to grow our market share. This is particularly true in process power where our share is currently very low.

Trends shaping the market

The Group is exposed to several long term growth drivers that will support future growth. These include the key trends of the proliferation of electronic devices, accelerating global digitisation and the long-term demand for healthcare equipment.

Our position

Our broad and up-to-date product portfolio, combined with our engineering services capability to modify products, allows our product to more effectively integrate into the customer’s application. This means we are ideally positioned to support our customers and solve their power problems. We are also ideally placed to acquire complementary businesses to expand our product and engineering offering to expand our addressable market within our existing customer base.

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The markets we serve

We focus our resources on the key accounts that value our quality and high level of service and support, particularly during the critical design in stage when they are trying to get the power converter to effectively and safely power their prototype system, whatever type of application it might be.

Revenue trends

The revenue trends for each sector are set out below:

HEALTHCARE

We have a strong healthcare business due to our broad medical power converter offering, full traceability of components and high-quality in-house manufacturing. We believe we are now the largest provider of medical power conversion products in the world.

HOW THIS MARKET HAS BEEN
AFFECTED BY COVID-19:

Early during the pandemic we saw significant demand for our products that were designed into critical care applications required for the treatment of COVID-19 patients. These included various types of ventilators, patient monitors, drug delivery devices, hospital beds, suction pumps and specialist ultrasound and portable X-ray. We estimate that we received an additional £15–£20 million of orders as a result. By contrast, other areas of healthcare such as robotic surgery, endoscopy, other diagnostics and dentistry, were extremely weak compared to 2019. We expect these to recover in 2021.

INDUSTRIAL TECHNOLOGY

The market for industrial technology is by far the most diversified of all our markets. There are no large individual programmes even though we are dealing with many blue-chip industrial customers. We focus on fast growing niches in this market such as robotics, test and measurement, 3D printing and additive manufacturing, smart grid, and analytical instruments.

HOW THIS MARKET HAS BEEN
AFFECTED BY COVID-19:

Demand from our industrial technology customers contracted 19% as a result of the pandemic as demand for their products dropped or their own manufacturing or supply chains were disrupted due to COVID-19. We started to see recovery in this sector in the second half of 2020.

SEMICONDUCTOR
MANUFACTURING
EQUIPMENT

Our customers recovered strongly from the cyclical downturn in this sector that started in 2018 and started to recover in Q4 2019 in terms of orders. A combination of increased demand in the memory market and advances in process technology drove the growth. We see this as an attractive sector for our long-term growth as the demand for semiconductor devices is driven by multiple factors such as Artificial Intelligence (AI), big data, the Internet of Things (IoT), autonomous vehicles and the roll out of 5G.

HOW THIS MARKET HAS BEEN
AFFECTED BY COVID-19:

We believe that COVID-19 has and will cause acceleration of many trends in the world such as remote working, general digitalisation, and online shopping, which will fuel further growth for semiconductor devices.

Market Size and Opportunity

We estimate that XP Power has a 6.4% share of its addressable global market.

North America

North America is a significant market for power electronics with many large customers, particularly in healthcare and semiconductor manufacturing equipment..

63%

OF REVENUES

TRENDS SHAPING
THE REGIONAL MARKET

In general, our customers in North America are the most innovative and fast moving. We see this particularly in healthcare. North America is also the de facto leader in semiconductor manufacturing equipment; a sector we consider to have strong long-term growth prospects for XP Power.

PERFORMANCE

North America produced excellent growth in 2020 as the semiconductor manufacturing equipment sector recovered strongly and healthcare orders due to COVID-19 more than compensated for weakness in industrial technology.

Europe

North America is a significant market for power electronics with many large customers, particularly in healthcare and semiconductor manufacturing equipment.

28%

OF REVENUES

TRENDS SHAPING
THE REGIONAL MARKET

Our customers in Europe are principally involved in industrial technology with some healthcare and very little semiconductor manufacturing equipment. It is, therefore, by far, our most diverse market.

PERFORMANCE

Although Europe produced growth in difficult conditions due to COVID-19 related healthcare business, it was hardest hit due to its exposure to industrial technology. Europe also did not benefit from the semiconductor manufacturing equipment exposure that Asia and North America enjoy.

Asia

Although Asia is a large market, much of it is not available to XP Power, as many customers value purely cost over service and support. Nevertheless, there are a number of significant niches where our proposition is compelling. Asia’s up and coming semiconductor manufacturing equipment market is particularly attractive.

9%

OF REVENUES

TRENDS SHAPING
THE REGIONAL MARKET

Markets in Asia are generally growing faster than in North America and significantly faster than in Europe. Many applications are not attractive to us where customers prioritise cost over service and support. However, there are many attractive areas that we can service with our more complex highpower and high-voltage products.

PERFORMANCE

Asia produced excellent growth in 2020, following a strong 2019, driven principally by customers in the semiconductor manufacturing equipment sector.

OUR GROWTH DRIVERS

The opportunities for XP Power – expanding our addressable market

We consider that we have strong and enduring relations with the key accounts that place value on our proposition of a broad and up-to-date product portfolio, excellent service and support, resilient supply chain, and low cost Asian manufacturing provides the flexibility to combine our products into a customised complete power solution using our engineering services group.

PROLIFERATION
OF ELECTRONIC
DEVICES

Electronic devices are becoming more and more pervasive in our lives  as new technologies and innovation continues. This trend is accelerating  with the adoption of the Internet of Things (IoT), Artificial Intelligence (AI),  big data and the roll out of 5G. These devices drive demand for semiconductor  manufacturing equipment, which is a key focus area for XP Power.

HOW WE ARE RESPONDING

We have the broadest range of standard products in our industry that are  designed to be easy to modify to power the customers’ specific application.  Many of our products are suitable to power semiconductor manufacturing  equipment processes and electronics, and these customers value our  engineering services proposition.

HEALTHCARE
 
 

A global population that is both increasing and ageing, coupled with advances in diagnostic technology and surgical robotics, is driving the demand for more healthcare devices. This makes healthcare an excellent sector for XP Power. The customers in this area demand the ultimate quality and reliability, and appreciate and value XP Power’s proposition. COVID-19 has brought into focus that generally the healthcare infrastructure is inadequate in today’s world.

HOW WE ARE RESPONDING

We have the broadest, most up-to-date range of medically approved power converters in our industry and are the world’s leading provider of healthcare power conversion products.

CONNECTIVITY AND
INDUSTRIAL
REVOLUTION 4.0

Customers’ applications are becoming ever more complicated and increasingly more  connected enabling Industrial Revolution 4.0. Demand for communication between  the customers’ applications and the power conversion solution are rapidly expanding.

HOW WE ARE RESPONDING

Our engineering services groups are providing complete power solutions  including connectivity to and from the customers’ application using firmware and  software and, where required, connection to the internet.

CUSTOMER
PENETRATION

Our blue-chip customer base provides good opportunities to win additional  new product programmes from multiple engineering teams across the globe.  We have gained corporate approval at many blue-chip companies over the past  few years. We are now capitalising on these approvals to win a larger share of  the business that is available in those customers by expanding our product  offering.

HOW WE ARE RESPONDING

RF Power solutions from the acquisition of Comdel, and high voltage solutions  from the acquisition of Glassman, increase our available market from  US$2.7 billion to $4.9 billion.

CLIMATE CHANGE
 

Climate change and emission of greenhouse gases is becoming an increasingly significant issue as emerging countries develop and  urbanise. XP Power has taken a leading role in developing ultra-efficient  products, which consume and waste less energy and are suitable for use in  healthcare and industrial applications.

HOW WE ARE RESPONDING

We have developed a portfolio of “XP Green Power” XP Power products with  class-leading efficiencies and have the most environmentally friendly  manufacturing facility in our industry.

ENERGY EFFICIENCY
AND RELIABILITY

The requirement from customers and legislation for products to consume  and waste less energy is driving demand for more efficient power  converters. This goes hand-in-hand with reliability for critical applications  as ultra-high efficiency products do not require relatively unreliable fans to  cool them, and cooler systems mean key components such as electrolytic  capacitors have longer lifetimes.

HOW WE ARE RESPONDING

We have developed a portfolio of “XP Green Power” XP Power products  with class-leading efficiencies and low standby power, which can operate  without fan cooling.

LEGISLATION
 

Our industry continues to be the subject of an increasing raft of  legislation from numerous countries and standard setters relating to areas >such as environmental impacts, safety requirements and, above all, energy efficiency. The compliance costs of keeping up with this legislation are  significant. XP Power is of a size where we can dedicate significant resources to this area, yet be agile to respond quickly with new products or documentation as  required.

HOW WE ARE RESPONDING

We have dedicated resources devoted to power converter legislation, including  the latest safety regulations, which our customers value.

CAPITAL
EQUIPMENT

Our products are designed into and power capital equipment and, as such,  are subject to the capital equipment cycles. We have found growth niches  in new industrial technologies such as 3D printing, analytical instruments,  smart grid and robotics. New capital investment generally leads to greater  productivity. We consider that the medium and long-term opportunities  remain positive for capital equipment. This is particularly the case in emerging  markets as labour costs rise significantly.

HOW WE ARE RESPONDING

We have the largest direct sales force in our industry together with the broadest  product portfolio, so we are well positioned to take advantage of growth  in the capital equipment markets. We have also targeted newer and faster  growth industrial sectors such as 3D printing, analytical instruments, robotics  and smart grid infrastructure.

INNOVATION
 

Our customers possess a competitive need to launch new products offering  increased productivity and functionality while reducing harmful environmental  impacts. In addition, our customers are trying to differentiate their products  from their competitors, which frequently results in different or new power  conversion requirements.

HOW WE ARE RESPONDING

With the acquisitions in RF Power in 2017, and high voltage power in 2018,  we now have five design centres around the globe offering a diverse range of  products.

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