Amid a rise in economic growth and the implementation of government policies designed to stimulate demand, China's electronics market is expected to enjoy a strong year in 2013, led by continued growth in shipments of smartphones, according to the IHS iSuppli China Electronics Supply Chain service at information and analytics provider IHS (NYSE: IHS).
IHS iSuppli forecasts that China's domestic smartphone market will grow to 268 million units in 2013, up 44 percent from 186 million in 2012. While this is down from the stunning 182 percent growth in 2012, smartphones remain the most dynamic segment for domestic electronics demand growth in China.
Chinese smartphone OEMs will continue to dominate the domestic smartphone market in 2013, with a more than 65 percent share of the market.
Smartphone makers in China also are expected to achieve strong export growth in 2013, with shipments rising to more than 170 million units this year. Meanwhile, gray market smartphone shipments will grow to 33.5 million units in 2013, up from 20.2 million units in 2012.
A year to forget
Business conditions in 2012 were poor for most Chinese electronics companies and semiconductor suppliers. At the beginning of last year, major Chinese OEMs were overly optimistic about market demand. But facing increasing inventories, the Chinese OEMs began to reduce orders to their suppliers starting during late in the second quarter of 2012. Because of this, semiconductor vendors suffered a flat third quarter, which is traditionally a hot selling season, as well as a weak fourth quarter.
The Chinese economy in 2012 endured strong downward pressure as a result of the uncertain macroeconomic situation worldwide.
Sales during Golden Week in October fell short of expectations. Both electronics OEMs and semiconductor suppliers saw increasing channel inventories during the fourth quarter of 2012
However, the Chinese government implemented a series of pro-growth measures that allowed the country's gross domestic product (GDP) to exceed the 7.5 percent official target for 2012.
In November of 2012, China's national government engaged in a once-in-decade leadership transition.
The new leaders, President Xi and Prime Minister Li, are expected engage in reforms continuously during the next decade. One of these reforms, urbanization, will be the key driver to boost domestic demand. Furthermore, the Central Economic Work Force will maintain a proactive fiscal policy and prudent monetary policy in 2013.
IHS believes that GDP growth in China will top 8 percent in year 2013, as infrastructure investment leads to stronger domestic demand.
After the two major holidays in 2013, New Year's Day and the Chinese Spring Festival, inventories of electronic products will decline to low levels. Because of stronger domestic and export demand for electronic products, semiconductor suppliers will have better sales starting in March. IHS iSuppli believes that China's semiconductor market will be quite strong in the second and third quarters this year.
Many markets expected to grow
Mainly affected by China's economic slowdown, Chinese PC market growth was less than expected in 2012. China's domestic PC market amounted 80 million units last year, up 8.1 percent from 2011.
However, China's PC market is expected to experience a small uptick in demand in 2013. Microsoft's new Windows 8 operating system, together with the Ultrabook, will be key drivers for expanding the domestic PC market this year.
There still exists room for the China automotive electronics market to grow, particularly in the areas of drive, safety and connectivity. China is releasing a series of policies intended to limit auto pollution and oil consumption, which in turn will increase the semiconductor demand for engine control and sensor systems to improve fuel efficiency. China's total automotive semiconductor market will enjoy 12 percent year-over-year growth in 2013.
China's domestic consumer electronics market will recover in 2013. The new subsidy programs will stimulate domestic demand for medium- and high-end consumer electronics. The improving housing market and urbanization will drive sales of LCD TVs, air conditioners, refrigerators and washing machines. For example, the domestic LCD TV market will grow to 49 million units in 2013, up 5 percent from 2012.
Driven by the infrastructure investment from the central government, the industrial electronics market also will enjoy double-digit growth in 2013. Meanwhile, all three Chinese wireless carriers will develop increasing numbers of pre-commercial 4G networks. That will greatly stimulate the long term evolution (LTE) base station market in 2013.
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