Power supply manufacturing flourishes in Dongguan's industrial transformation

by Vianie Li & Cecile de Veyra

A key area in China’s science and technology innovation corridor in the Greater Bay Area, Dongguan continues to invest in boosting its industries, especially in the high-tech sector. The fifth largest economy in the GBA, it has been emphasizing R&D by allocating resources from annual revenue, which in 2019 was second only to Shenzhen. The city has partnered with universities and research institutions as well. The most recent such collaboration is with the Dongguan University of Technology and City University of Hong Kong (CityU) to establish a CityU campus in Songshan Lake Science City, which will open in September 2023.

“We’ll focus our resources into building a base for strategic emerging industries and promoting an overall increase in the value of the industry chain,” said Liang Weidong, Dongguan’s party secretary, in early 2021 as quoted by the South China Morning Post.

This plan was reiterated in a circular released in February 2022, which includes advancing the Made-in-Dongguan brand based on the “clustered, high-end, digital, brand-based and green development of manufacturing industries during the 14th five-year plan period.”

For the manufacturing sector for power supplies and other products, Dongguan’s restructuring will provide added value. It has already been attracting new investments, including from Flex. This company, which announced the construction of a facility in Dalingshan town in 2019, started operating on a mass scale in 2021. Its target annual output is 90 million power supplies and total production value $882 million.

Also based in Dongguan are top suppliers such as Dongguan Shilong Fuhua (UE Electronics), ATL, Zhicheng Champion, Delta, Duracell, Phihong and Acbel. Their factories are in the towns of Tangxia, Liaobu and Changping.

The city also plays host to manufacturers in niche segments of the power supply sector. One of them is Dongguan Mass Power, which specializes in set-top box power supplies and is said to have a 13 percent share of global shipments in this category. This company posted more than 50 percent increase in sales in the past two years, attributing the jump to demand for set-top boxes as people sheltered in place.

These key players are part of Dongguan’s thousand-strong production pool for power supplies. The rest are mostly small and medium-size homegrown enterprises.

Production expansion

Dongguan’s manufacturers of power supplies expect to keep increasing their output in the months ahead and through 2023.

Demand in consumer electronics, IT equipment, LED lighting, medical equipment, industrial control and new energy applications has been fueling this expansion. Electric vehicles and 5G deployment are expected to push this up further in the coming years.

Exports have also recovered, rising by at least 10 percent in 2021, according to suppliers interviewed by Global Sources. These companies are optimistic about maintaining this growth rate or even realizing as much as 20 percent uptick in 2022 and 2023.

Based on data gathered by Qianzhan Research Institute, China’s communication power supplies will have a market scale of $2.66 billion in 2022, rising by 8.3 percent from $2.45 billion in the previous year. This is projected to go up further to $3.41 billion in 2026.

R&D focus on small & smart

The range of power supplies available from companies in Dongguan includes AC/DC adapters, switching power supplies and LED drivers. Batteries and battery packs are also part of the selections of many manufacturers.

Products feature built-in safety features against short circuits, and overload and -current conditions. For rugged applications, there are water-resistant models, with an IP65 to IP68 rating.

Most power supplies are produced according to CE, GS, RoHS and UL standards, with batteries also having UN 38.3 certification.

Chinese companies welcome orders for customization and compete on price-performance ratio, in addition to offering aftersales services.

Majority of these suppliers currently cater to the entry-level and midrange markets. They are, however, pursuing R&D to introduce more compact and smart units that will broaden their selections and enhance their range for any specification.

ICs, passive components, PCBs, adhesive and cases are the components and materials used in producing power supplies.

ICs usually come from TI, ADI, Qualcomm, ON Semiconductor, Infineon, STMicroelectronics and Renesas. Some manufacturers use variants from domestic companies for their lower costs and stable supply. Major homegrown sources of this component include SGMicro, Will Semiconductor, Professional Solution, HiSilicon and Silan.

The shortage of ICs in 2021 raised costs, which forced suppliers to increase their product prices by more than 10 percent. Some companies hiked up their quotes by as much as 15 percent.

ICs are expected to remain in short supply in the first half of 2022.