With the acquisition of Eltek (the seventh largest supplier in the market with 2.6% of the global market), Delta Electronics will consolidate its position in the power supply market. The combined revenue of the two manufacturers represented one-fifth of the global market revenue in 2013, more than the combined market share of the second and third largest suppliers, Artesyn Technologies and Lite-On.
The acquisition will help Delta Electronics secure its position, particularly in the high-end telecommunications/data communications markets where Eltek has focused its product offerings. Although increasingly modest, the telecommunications/data communications sector is the largest market segment, accounting for a quarter of the total market in 2013, and this is expected to remain unchanged over the next five years. With this acquisition, Delta Electronics will represent 28% of this market segment based on 2013 revenue. This will be especially important in the coming years as the industry faces competition from Chinese telecommunications manufacturers such as Huawei and ZTE, which are increasing their market share.
This is the second largest merger and acquisition move in the power supply market this year. In April, Bel Fuse acquired ABB's Power-One power supply business. This strengthened Bel Fuse's position in the DC-DC converter market, moving it from 15th to 6th place.
With industry growth still limited and competition from lower-cost suppliers increasing, IHS expects further acquisitions to be likely in 2015.
