China semiconductor market to rebound in 2010

El Segundo, Calif. — Following a decline in 2009, the China semiconductor market is expected to rebound significantly in 2010, growing 17.8 percent to reach $80.1 billion, fueled by demand in automotive electronics, consumer electronics and wireless communications, according to iSuppli Corp.

iSuppli projects the China semiconductor market to decrease to $68 billion in 2009, down 6.7 percent from $72.9 billion in 2008. While this is a significant decline for the Chinese semiconductor market, which has consistently generated strong growth in past years, it’s far less than the 16.5 percent drop expected for the global chip industry in 2009, according to the market researcher.

“Because of the Chinese government’s economic stimulus package, the country’s domestic electronics market started rebounding in the first quarter of 2009,” said Kevin Wang, director, China research for iSuppli, in a statement. “This fueled a subsequent recovery in semiconductor demand that limited the decline in 2009 and set the stage for a return to double-digit percentage growth in 2010.”

The report indicates that automotive electronics represents the only major application market that will generate an increase in semiconductor demand in 2009, with chip revenue rising to $2 billion, up 11 percent from $1.8 billion in 2008. With the global automotive market in a slump, China’s domestic sales will drive the increase, according to iSuppli.

What’s helping fuel China’s automotive sales are both subsidies and a reduced consumption tax for purchasing a car with an engine smaller than 1.6 liters, said Wang.

“Because of this, iSuppli expects that China’s automobile market will expand to 12 million units in 2009, up 33 percent from 2008,” he said.

As the global car market recovers in 2010, China’s automotive semiconductor growth is expected to accelerate to 19.7 percent, reaching revenue of $2.4 billion for the year, according to iSuppli.


It’s a different story for consumer electronics. Revenue is expected to decline in the consumer electronics chip market to $15.3 billion in 2009, down 11.6 percent from $17.3 billion in 2008. However, there are some bright spots including the LCD-TV and appliance market this year, said iSuppli.

Conditions are projected to shift dramatically in 2010 for China’s consumer electronics segment as the global economy improves and exports recover, with revenue rising to $17.8 billion, up 16.3 percent from 2009, said iSuppli

China’s wireless communications semiconductor market is set to decline to $16.3 billion in 2009, down 7.6 percent from $17.7 billion in 2008, but it is expected to expand to $20.3 billion in 2010, up 24.3 percent from 2009, according to the market researcher.

iSuppli expects China’s domestic handset market to reach 260 million units in 2010, and the 3G handset market to reach more than 25 million units.

iSuppli’s China Application Market Forecast Tool (AMFT) provides additional information.