automotive semiconductor consumption, automotive entertainment systems, electronics systems

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Abstract, --January 8, 2004-- The Chinese automotive sector is expected to provide a strong opportunity for semiconductor suppliers through 2007, according to a new iSuppli report.

The nation's automotive semiconductor consumption is projected to experience a compound annual growth rate (CAGR) of 28 percent through 2007 from $416 million in 2002 to $1.45 billion in 2007, according to a new report from analyst firm iSuppli. China will account for 10 percent of global consumption in this category.

"China will grow to be the world's largest manufacturing base of automotive entertainment systems by 2007," said Nancy Dang, analyst with iSuppli, in her report. "China's production of audio stereo systems will account for an estimated 39 percent of global output in 2007."

Demand for other types of electronics systems will also expand in China. Those include engine control units, electronic dashboard instrument clusters, remote keyless entry systems, antilock breaking systems, airbags and others.

Auto stereos will also grow into a big market in China. In 2007, these devices will account for 46 percent of all auto-related semiconductor consumption in China, according to iSuppli.

"Semiconductor suppliers should realize that more than 80 percent of China's electronics production, by value, is generated by multinational makers, which are adopting global procurement methods," said Dang. "With the continuing migration of their procurement offices and research and development centers, more integrated circuit purchasing decisions will be made in China, based on global development platforms."

Dang noted that several multinational automotive electronics makers have established international purchasing offices in China. However, the offices have purchased few semiconductors so far. Yet there are still substantial opportunities for local semiconductor vendors, particular those that sell discrete semiconductors, according to iSuppli.

However, China's automotive electronics systems are centralized among top electronics manufacturers, Dang said. By teaming up with these players, semiconductor suppliers could ensure stable businesses in China, she added.

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