Global Spending on Industrial Chips Shifts to China and Asia-Pacific

18 November 2013

Semiconductor spending by original equipment manufacturers (OEM) on industrial electronics will shift from traditional strongholds with mature economies to fast-growing emerging territories, even though a significant portion of the top-spending brands will remain firmly rooted in the developed world, according to a new report from IHS.

OEM chip spending on industrial electronics is set to decline in the years to come in the Americas, Europe and Japan, while climbing in China and the rest of Asia-Pacific.

In the Americas, share of OEMs purchasing industrial chips will dwindle from 36.35 percent to 35.49 percent, equivalent to a loss of 0.86 percentage points during the five-year period. For its part, the collective Europe-Middle East-Africa (EMEA) region—powered by Europe as the principal player in the triumvirate—will see its share go down from 30.36 percent to 29.28 percent, or a contraction of 1.08 percentage points. Japan will suffer the largest decrease in OEM spend market share, falling from 10.97 percent to 8.21 percent, or down 2.76 percentage points.

Meanwhile, China will emerge as a powerful new force, enlarging its portion of the OEM spend market from 12.91 percent to 15.74 percent, or a gain of 2.83 percentage points. The rest of Asia-Pacific excluding China and Japan will also enjoy good growth, expanding its market allocation from 9.40 percent to 11.27 percent, or an increase of 1.87 percentage points.

The semiconductors covered by the industrial electronics space encompass a broad range of markets. They include including building and home control, energy generation and distribution, manufacturing and process automation, medical electronics, military and civil aerospace, and test and measurement.

The United States continues to be a major presence, maintaining its rank as the world’s top buyer of industrial semiconductors despite a slippage in market share for the overall Americas region. U.S. share in 2012 of global OEM spending on industrial chips was 31.6 percent, down a tenth of a percentage point from 31.7 percent in 2011.

Among the world’s top brands that make the U.S. their home are General Electric in lighting and metering, Honeywell in building and home control, Halliburton in energy, Johnson & Johnson in medical, Boeing and Raytheon in aerospace, and Agilent in test and measurement.

China is the world’s second-largest purchaser with 12.8 percent market share, up from 12.2 percent. Among the brands based in China with major spending power on industrial chips are Dahua, Ningbo Water Meter and Midea. Also, maintaining significant locations in China are global brands like Siemens and ABB in manufacturing and process automation, as well as GE Healthcare in medical electronics.

Japan continues to be the third power of note in the market, even though its portion of OEM spending has slipped to 11.0 percent, down from 11.5 percent. Notable industrial OEMs based in Japan include Panasonic, Mitsubishi, Toshiba and Hitachi.

At No. 4 among the world’s major industrial chip buyers is Germany with 9.7 percent market share, up from 9.6 percent. Germany is home to leading OEMs like Bosch, Thyssenkrup, Osram, Siemens and Hauser.

In fifth place is France with 5.7 percent share, down from 6.0 percent. Major industrial-based French OEMs include Schneider Electric, Thales, Alstom and pan-European aircraft manufacturer EADS.

Rounding out the Top 10 in the 2012 rankings were Switzerland in sixth place, Taiwan in seventh, India in eighth, Canada in ninth and South Korea in 10th. Sitting just below the Top 10, in 11th place, was the United Kingdom, followed by nine other countries making up the Top 20.

All told, the Top 10 held an indomitable 85 percent market share of global OEM spending on industrial semiconductors, with the Top 5 alone in control of more than 70 percent.

Read more >> Strong Q2 keeps industrial broad-based recovery on track

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