COVID-19 Impacts UPS Market, Spurring a 2.4% Decline in 2020

Following strong growth in 2019, the global market for uninterruptible power supplies (UPS) used in data centers is set to decline by 2.4 percent in 2020 as the COVID-19 pandemic negatively affects supply and demand.

UPS market revenue will total $8.3 billion this year, down from $8.6 billion in 2019, according to Omdia’s UPS Hardware Market Tracker. This contrasts with 4.2 percent annual growth in 2019, with the increase last year primarily propelled by data-center buildouts by cloud and colocation data-center service providers.

The revenue decline this year is primarily caused by supply chain and logistical issues associated with single-phase UPS products. In contrast, supply and demand for three-phase UPS systems are forecast to remain in line with 2019 levels.

UPS hardware demand from enterprises is expected to be negatively impacted throughout 2020, particularly in the energy, transportation, retail and government sectors. UPS hardware demand for cloud and colocation is expected to increase in 2020 and 2021.

“COVID-19 will have a negative impact on the global UPS hardware market in 2020, particularly for single-phase UPS products,” said Lucas Beran, principal analyst, cloud and data center research, at Omdia. “However, there are plenty of reasons to remain optimistic regarding the medium- and long-term market outlook for UPS. In most cases, enterprise demand is not disappearing, but rather being delayed. Cloud and colocation service providers are experiencing increased demand for their services and are accelerating data center deployments where possible. Opportunities in transformative technologies—such as edge computing—are growing as enterprises shift to support remote working and contactless services.”

Despite the poor outlook for full-year revenue in 2020, a recovery is expected to commence in the second half of the year and gain momentum in 2021. This rebound will generate 5 percent annual revenue growth in the UPS market in 2021.

The Americas and Asia-Pacific regions are forecast to grow at the fastest rates in 2021, while the recovery in Europe, Middle East and Africa (EMEA) is forecast to be relatively slow. UPS hardware market growth is forecast to remain elevated at rates above 4 percent in 2022 and 2023.

Additional UPS hardware highlights from the Omdia UPS Hardware Market Tracker report include:

• Single-phase UPS market revenue is forecast to decline 4.7 percent, while and three-phase revenue will decrease by 0.8 percent in 2020.
• Enterprise UPS market spending is forecast to decline by a mid-single-digit percentage in 2020, with specific enterprise segments declining by double digits.
• UPS spending by cloud and colocation service providers is forecast to grow in the low-single digits in 2020.
• Although global UPS market revenue will return to 5 percent growth in 2021, the North American and Asian regions will expand at higher rates, while EMEA growth will lag.
• The global UPS hardware market is forecast to expand at a five-year (2018 – 2023) compound annual growth rate (CAGR) of 3.1 percent.

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