Market Size of China Automotive Microcontroller Industry
|Study Period||2018 - 2028|
|Base Year For Estimation||2022|
|Forecast Data Period||2023 - 2028|
|Historical Data Period||2018 - 2021|
*Disclaimer: Major Players sorted in no particular order
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China Automotive Microcontroller Market Analysis
The Chinese automotive microcontroller market is expected to register a CAGR of 7% during the forecast period, 2021-2026. With vehicle operating systems running everything from infotainment to autonomous driving, vehicles are becoming ever more intelligent and less reliant on human operation. The technology is shifting toward V2X, which stands for 'vehicle to everything,' where information from sensors travels via high-bandwidth, low-latency, and high-reliability links. China is one of the leading supporters of cellular V2X, and with LTE-based solutions, the government currently plans for intelligent transportation systems (ITS), with spectrum in the 5.9GHz band allocation for C-V2X. By 2025, the strategy initiates that most new vehicles sold will be intelligent vehicles known as the "person-vehicle-road-cloud" model, which will achieve a new generation wireless communication network for vehicles (5G-V2X). This is expected to drive the demand for microcontrollers.
The growing demand for electric vehicles is expected to drive the market's growth. According to the Chinese Association of Automobile Manufacturers (CAAM), the EV market's share increased, with 8.4% decline in sales of combustion vehicles (26.82 million in 2018 to 24.56 million in 2019), with EV sales remaining relatively constant with 1.26 million in 2018 and 1.21 million in 2019. While government officials expect fossil vehicle sales to decline in 2020, the EV sales will remain relatively healthy, helped by a stable incentive environment and substantial numbers of Tesla's locally made vehicles in China. Beijing, Tianjin, Shanghai, and Shenzhen, among others are accounting for the demand for EV vehicles. Furthermore, premium EV makers in China, such as Tesla and Nio, have plenty of future growth, are driving the microcontroller market's growth. Also, China's New Energy Vehicle (NEV) policy is primarily guided by the MIIT, who announced that NEV subsidies would remain relatively steady during 2020 due to the cause of COVID-19 pandemic.
The anticipated rise in advanced features from the mid and high-end segments are expected to drive the growth of the market. The high demand of Chinese customers for greater connectivity in cars is driving the automakers to implement upgrades on their Chinese models ahead of the other major car players. The Chinese connected vehicle market is anticipated to witness a double-digit growth rate. According to the Accenture survey, currently, 11.6 million cars on Chinese roads feature online connectivity, which account for 10.6% of the market. Also, more than 41 million people in China will be using in-car connectivity by 2021.
Furthermore, in the quest to the forefront of the worldwide ICV (Intelligent Interconnected Vehicle) competition, numerous Chinese companies forged ties with firms across the world. Sino-German partnership in this field covers research collaborations, JVs to vehicle construction and HD mapping. As a Chinese firm with the most advanced ICV technology, Baidu maintains close ties with companies, such as Daimler, Bosch, Continental, and BMW, primarily via its Apollo platform. This advancement in features, with numerous partnerships, is expected to drive the demand for new innovation in microcontrollers that further increase the market's growth.
Ongoing trade stand-off and recent decline in the automotive sector due to the COVID-19 pandemic are challenging the market's growth currently. In January 2020, China's car sales reduced by 18%, and the China Passenger Car Association (CPCA) considers that the first two to three-month sales could decline by 40% or more. Production shortfalls mostly from international players in China, resulting from supply chain disruptions will impact global automakers. While Moody's Investor Service adjusted its global vehicle sales forecast to decline by 2.5% in 2020, instead of a previous 0.9% decline due to the COVID-19 outbreak. However, the decline is likely to be 6-8%, with knock-on effects into 2021.