High-Tech Markets Evolve in Asia

April 14, 2015
Electronica China 2015: maturing Chinese market growth and Asian tech expansion spell opportunity for global semiconductor industry.

Electronica China 2015 recently closed in Shanghai, highlighting the ongoing evolution of the Chinese and Asian high-tech markets. The 2015+ story for emerging markets in Asia has been the refocus on the Chinese and Indian economies. Looking at the current situation in China, especially as highlighted through Electronica China, there is significant momentum for new, sustainable growth upon exiting the current economic slowdown. Behind the slowdown, which has had many concerned about China's market potential, is the critical element of the intentional government refocusing from an export-led economy to a consumption- and service-based economy. This shift places greater emphasis on building and maturing the existing manufacturing infrastructure and supply chains for the purpose of spurring innovation and locally based designs and products to meet the coming demands from the growing, Chinese middle class.

Cross-Section Deepens

One aspect of this year's trade fair was the breadth of exhibitors from across China, showcasing the success of China's efforts to both move technology manufacturing into the interior of the country and to increase sustainable, locally based consumption targeting the enormous Chinese middle class. Although China has been in a period of economic slowdown, the trade show brought to life industry analysts' views that this is a step back in order to ensure sustainable growth moving ahead. Electronica China featured many new, expanded offerings from exhibitors as well as a good increase in attendance (approximately a 7% attendance increase, according to Electronica China reports).

On the technology hardware side, there was a wide cross-section of exhibitors that included automotive, medical, consumer products, computing, and energy OEMs. While on its own this set of exhibitors might not seem newsworthy, the wide-reaching array of solutions, components and products by locally based companies demonstrates the ongoing success in China's efforts to build and ensure a deep, sustainable, local high-tech industry that does not just support the world, but provides the economic impetus for growing its own middle-class—the next generation of global consumers who will dominate high-tech demand over the European Union and North America.

Opportunities Demand Established Partners

There were significant requests for discussing and developing solutions to expand local/regional supply chains throughout the Electronica China event. OEMs from across markets are facing new challenges to increase agility and expand locally and regionally based supply chains in order to support the growing demands for locally or regionally manufactured products.

Though the economic refocusing is certainly opening the competitive arena—and we see many new and expanding companies offering their components as well as service solutions—there is an associated need to ensure quality and have a long-established leader's support in navigating the widening set of opportunities for supply chain connections. Quality leaders with in-house, industry certified facilities and accredited quality professionals are in increasing demand because of this quickly opening market opportunity based on more competition along the semiconductor and electronics supply chain.

Not only is China's economic refocus placing an emphasis on the service sector, we see a similar refocus in deepening the service offerings globally in our industry. Hand-in-hand with local tech manufacturing growth and innovation are the arrival of many solution providers offering component design/manufacturing and similar support. Connecting all of these new opportunities and aligning the new strengths with strategic market plans is the core of the global services demands Smith responded to at Electronica China this year.

Globally since 2014, we have all seen once niche markets expanding and growing in the amount of semiconductor and electronics components (for example, automotive, medical, industrial automation and IoT (IIoT), energy). At Electronica China this year, this same global market growth was front and center promoting the many innovations, advanced technologies, and new market opportunities available for redefining regional and global solutions and new competition that will continue to spur innovation and loop back to continue the growth momentum. As Electronica's final report reminds us:

At electronica China 2015, more than 100 leading automotive electronics manufacturers and systems suppliers joined and showcased new power systems, circuit protection, connectors, EMC, switches, sensors, EMS and relevant solutions for new energy vehicles.

Importantly though, Electronica China was not just about the "new" in the growth momentum; the exhibitors included many long-standing industry leaders and giants. The growth that is building is widespread and deep in China. The industry's global leaders, service providers, alongside new  local/regional players are taking part in the development of a long-term, sustainable Chinese semiconductor market—one that includes production but importantly the fundamentals for growing China's consumption- and service-led economy that will support the world's largest middle class. From what we saw and heard at Electronica China, all signs are green and promising for realizing China's goals—and along with those come a significant set of opportunities for the entire semiconductor supply chain.

Mark Bollinger is vice president, marketing, for Houston-based independent distributor Smith & Associates. He can be reached at [email protected].

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