Inverter is widely used in various mechanical equipment, such as fans, water pumps, reel machines, machine tools and so on. Since China’s low-voltage inverter field started relatively late compared to developed countries, foreign brands have occupied the market opportunity. In the late 1980s, the inverter products of Yaskawa Electric, Mitsubishi Electric, Fuji Electric and other Japanese enterprises successively entered the domestic market, and the inverter market was dominated by Japanese brands in the early stage.

By the mid-1990s, ABB, Siemens, Danfoss and other European and American companies entered the Chinese market with the image of high-end brands, forming a competitive pattern dominated by European and American brands and Japanese brands. After entering the 21st century, China’s local brands have risen rapidly from scratch, achieved a breakthrough in the low-voltage inverter market, and gradually expanded the market share. Since then, the domestic low-voltage inverter market has formed a three-pillar pattern dominated by Japanese brands, European and American brands and local brands.

With the continuous expansion of domestic industrial production scale, the overall size of China’s inverter market shows a stable growth trend. According to statistics, the market size of China’s inverter industry in 2020 reached 54.1 billion yuan, an increase of 9.3%, and the CAGR from 2015 to 2020 was 7.3%.

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2012-2020 China inverter industry market size and growth rate

Among them, the low-voltage frequency converter accounts for a relatively large scale, accounting for 74% in 2020. With the high efficiency and energy saving market demand and national encouragement policies, the proportion of high voltage frequency converter scale has increased year by year, from 22% in 2012 to 26% in 2020. In terms of the specific market size, in 2020, China’s high-voltage inverter market size is about 14.1 billion yuan, and the low-voltage inverter market size is about 40 billion yuan.

The upstream of the frequency converter industry is composed of various raw materials and parts production industry, of which the main parts are transformers, IGBT, cooling fans, resistors, capacitors, etc., the midstream is composed of frequency converter manufacturers, the main work is the design, production, commissioning, after-sales, etc., the downstream is composed of various demand industries, mainly electric power, metallurgy, coal, petrochemical and other industries.

From the downstream application point of view, the application field of high voltage inverter is concentrated in the field of high energy consumption, mainly used in metallurgy, electric power, petrochemical, mining and other high energy consumption industries, which can realize the soft start, intelligent control and speed regulation energy saving of all kinds of high voltage motor fans, pumps, air compressors, elevators, belt machines and other loads, and the total CR5 proportion is 76% in 2021.

In recent years, with the support of China’s industrial motors at the policy end, the penetration rate of energy-efficient motors is expected to accelerate in the future. In June 2021, the “GB18613-2020 motor energy efficiency limits and energy efficiency grades” were officially implemented to eliminate energy efficiency motors below IE3. In November 2021, the Ministry of Industry and Information Technology issued the “Motor Energy Efficiency Improvement Plan”, requiring the annual output of energy-efficient motors to reach 170 million kilowatts by 2023. In service, high-efficiency energy-saving motors account for more than 20% (while the current penetration rate is less than 10%). The “Industrial Energy Efficiency Improvement Action Plan” released in June 2022 proposed that the proportion of new high-efficiency energy-saving motors in 2025 should reach more than 70%.

The application scenario of low-voltage inverter is relatively broad, the downstream is more dispersed, and it is generally used in lifting machinery, elevators, textile machinery and other fields, and the total proportion of CR5 in 2021 is 43%.

From the perspective of industry competition pattern, the domestic inverter market was dominated by foreign capital in the early stage, and domestic substitution gradually landed. In recent years, the quality of domestic brand products has gradually improved, the failure rate has gradually decreased, and the cost performance of imported brands has shown advantages. According to relevant data, in 2021, European and American brands accounted for 44.6% of low-voltage inverters, Japan and South Korea accounted for 13.1%, and Chinese local brands accounted for 42.3%, an increase of 3.6pcts compared with 38.7% in 2017.