Market Trends of China Analog IC Industry
Growing Adoption of 5G Technology to Boost Market Demand
- The growing penetration of 5G technology is driving the demand for 5G-enabled smartphones and supporting the digitization of other industries. The high-speed data connectivity facilitated by 5G is expected to positively impact industrial automation and the adoption of advanced technologies such as AI, IoT, etc. As a broad range of electronic devices is used to establish such infrastructure, the demand for analog circuits is also expected to grow. The growing shipments of 5G cellphone handsets and the infrastructure to support them are key factors contributing to the demand for analog ICs.
- The increasing deployment of 5G connectivity in China is also driving the incorporation of connected car features in vehicles, thus supporting the market's growth. For instance, according to the Ministry of Industry and Information Technology (MIIT), China aims to have 2 million installed 5G base stations in 2022 to expand the country's next-generation mobile network. The Chinese mainland currently has 1.425 million installed 5G base stations that support more than 500 million 5G users nationwide, making it the biggest network in the world, as per MIIT.
- The government of China plans to prioritize the development of 5G and aims to make significant progress in digitalization by 2025. For instance, in February 2023, the country issued a plan calling for accelerated development of 5G, data centers, IoT, and supercomputing technologies.
- Data resources and digital infrastructure are the main foundations of China's plan. China also aims to promote the digital transition of its economy, society, culture, governance, and business sectors, while strengthening digital innovation and security.
Understand The Key Trends Shaping This Market
Download PDF
Automotive Sector is Expected to Hold Significant Market Share
- The automotive industry is another major sector wherein the demand for analog IC is expected to grow further as the industry has been reporting continuous growth over the last few decades. Automobile manufacturers such as BYD, FAW Group, and SAIC Motor have been dominating the automotive industry for quite some time now. During the forecast period, they are expected to hold a notable market share in the global automotive industry.
- Over the years, China has established itself among the major automobile manufacturers in the world. In recent years, a trend has been observed wherein automobile manufacturers have started to focus more on electric mobility solutions that positively impact the demand for analog IC, considering their broad use cases in electric vehicles, especially in the infotainment and ADAS system.
- High penetration of semiconductor devices in automotive systems, due to the increased use of electronics in fuel efficiency, safety, emission reduction, navigation, and entertainment systems, is expected to boost the demand for analog ICs. Analog ICs significantly enhance the performance of automotive infotainment systems.
- According to the International Council on Clean Transportation (ICCT), throughout the first six months of 2022, electric vehicles in China constituted almost one-fourth of all new passenger car registrations, with PHEVs accounting for 5% and BEVs for 19%.
- The government is also taking several initiatives to stimulate the growth of the Chinese automotive industry. For instance, in September 2022, the State Taxation Administration (STA), the Ministry of Finance (MOF), and the Ministry of Industry and Information Technology (MIIT) jointly announced the continuation of tax exemptions on purchases of new energy vehicles. Hence, with EV sales expected to sustain a similar growth pattern, the demand for analog IC across the country's automotive industry is also expected to grow further during the forecast period. Volkswagen invested USD 18.3 billion in the Chinese market by the end of 2022, including the manufacturing of e-mobility and autonomous vehicles.
