In this report, Technavio covers the market outlook and growth prospects of the global PoE chipset market for 2016-2020. Power over Ethernet (PoE) transfers DC current through the standard Ethernet cables, including CAT5, CAT5e, and CAT6 cables. The prime advantage of PoE technology is that one cable does the job for transferring both data as well as sufficient power, thereby eliminating additional costs for cabling.
“The increasing broadband penetration and growing network traffic will increase the requirement for high-speed Ethernet systems, thus driving the global PoE chipset market,” says Sunil Kumar Singh, a lead embedded systems research expert from Technavio.
Technavio’s hardware and semiconductor research analysts segment the global PoE chipset market into the following regions:
In 2015, with a market share of over 48%, the Americas dominated the global PoE chipset market, followed by EMEA with around 35% and APAC with approximately 17%.
Americas: largest revenue contributor
The Americas is the largest contributor to the market in terms of revenue and is likely to grow at a CAGR of close to 9%. In 2009, the American Recovery and Reinvestment Act (ARRA) was enacted by President Barack Obama. Under this act, the government will invest USD 831 billion between 2009 and 2019. The money will be spent in creating jobs, providing tax incentives, social welfare programs, and for the development of education, health, and renewable energy infrastructure in the US.
The ARRA smart grid investments included USD 4.5 billion investment for the modernization of nation's smart grid infrastructure. Until 2015, more than USD 7 billion had been invested in smart grid deployment projects. As PoE is gaining traction in the smart grid segment, the revenue contribution from this region is increasing. Canada and Mexico are also showing significant growth in the deployment of smart grid solutions. Mexico is planning to deploy 30.2 million smart meters between 2015-2025.
In addition, the Americas is the largest contributor to the Ethernet switch market revenue because there are a number of data centers that are being operated by CSPs, telecommunication service providers, enterprises, and government agencies. In addition, the US is a more advanced country in this region, where the access to the Internet is very high along with the presence of many large enterprise branch office (headquarters) and university campuses. In addition, there are also many retail shops that offer access to the Internet on the go with high-speed broadband, requiring advanced Ethernet switching and routing appliances. In the coming years, South America is expected to be a major contributor toward the revenue of Ethernet switches and routers because of the establishing of cloud and telecommunication data centers along with broadband penetration. As a result, the adoption of 100GbE switches will be more in this region during the forecast period.
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EMEA: replacement of aging electrical grids with smart grids to boost growth
EMEA is the second major dominating region in terms of revenue and is predicted to grow at a CAGR of more than 8% during the forecast period. The demand for PoE chipsets in this region will be driven by Africa, Austria, Germany, France, Denmark, Italy, the Netherlands, Turkey, Sweden, and Saudi Arabia. This is because the governments in these countries are focusing on replacing their aging electrical grids with smart grids. The consumers and business organizations have realized the efficiency gains of smart grids. Moreover, government regulations to reduce carbon emissions is also one of the major factors driving the investment in smart grids.
During the period of 2002-2015, more than 470 smart grid projects were launched in Europe across 47 countries, amounting to more than USD 350 billion investment. Gulf Cooperation Council (GCC) countries are also investing in smart grid infrastructure to stabilize power supply and meet their energy demands.
In addition, the growing requirement of businesses operational needs such as video growth, network-based businesses, virtualization, and cloud computing, competitive business environments are prompting enterprises to adopt 10/40GbE switches and routers.
APAC: fastest-growing market with a CAGR of over 15%
Though APAC was trailing in the adoption of PoE technology in 2015, it is expected to be one of the fastest-growing markets during the forecast period, growing at a CAGR of over 15%. The majority of the growth in the region will come from Australia, China, India, Japan, the Philippines, Singapore, and Malaysia. China is the fastest-growing market in the region because of the implementation of smart grid infrastructure. The Chinese government is aiming to equip 95% of households with intelligent metering systems by 2017. In May 2015, National Smart Grid Organization of India announced its plan to invest USD 120 million by 2017 in smart grid infrastructure.
“In addition, the construction of data centers by global enterprises and CSPs in Southeast Asia to support the growing customer base will boost market growth,” says Sunil. Broadband penetration such as mobile-based Internet access, network-based businesses, and cloud-based service adoption, and competitive business environments are prompting enterprises to adopt 10/40GbE switches and routers.
The top vendors in the global PoE chipset market highlighted in the report are:
- Maxim Integrated Products
- ON Semiconductor
- Silicon Laboratories
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