Market Hotspots 2021-2025—Smart Sensors
Release time：
24 Feb,2022
Summary
While it's often said that the core of technology is the "chip," sensors are the foundation of perception and the source of data for new-generation information technologies such as the Internet of Things, artificial intelligence, and 5G. Currently, Chinese MEMS sensor manufacturers face numerous challenges, and there is enormous potential for domestic substitution in areas ranging from upstream design and midstream manufacturing to downstream packaging and testing.
If we compare a chip to a "brain," then a sensor is like a "sense organ." The eyes, ears, and nose are also very important.
There are also many classifications of sensors:
In an article analyzing sensors, "Smart Sensors," published on September 26th, we already made a preliminary analysis and prediction of sensors. Here's a review:
China has become a highly influential Internet of Things market with enormous development potential and an urgent need for domestic substitution. Smart sensors will be another important opportunity for China to catch up after 5G.
Fundamental Logic:
I. Rapid Market Development and Huge Market Potential
Although China started late in the sensor field, the growth rate of China's development in the Internet of Things and smart sensor fields is significant. By 2017, the size of China's MEMS sensor market had reached 12.46 billion yuan, a year-on-year increase of 14.6%. It is estimated that the scale of China's smart sensor industry will reach 26.3 billion yuan in 2019 and 54 billion yuan in 2023.
II. Embracing Autonomous Driving and the Internet of Things
The field of autonomous driving includes in-vehicle sensors, autonomous driving technology, intelligent manufacturing, and automotive communication. However, the investment amount and total investment in various technologies vary greatly, with sensors and automotive electronics being two favored areas. Sensor investment totaled $16 billion, double that of automotive electronics.
5G's universal connectivity, smart phones, wearables, virtual reality, smart hardware, video interaction and security monitoring, and robots are all hot application areas for sensors. Smart sensors will be ubiquitous, and market demand is rapidly increasing.
III. Accelerated Domestic Substitution and Policy-Driven Emphasis
As a consumer market for automobiles and the Internet of Things, China's domestic sensor market has a demand in the trillions, with annual imports exceeding 170 billion RMB. However, China's sensor market share is only 10%, with 90% controlled by foreign companies.
With such a large market size and the geopolitical situation of the Japan-Korea trade, domestic substitution is urgently needed, so the smart sensor industry has enormous development potential.
Sensors have risen for a week, with positive news over the weekend: major support policies for sensors may be in the works. Currently, the news has not been further confirmed and is merely a hazy catalyst for thematic investment. More attention should be paid to the technical trends of popular stocks to judge market developments; the market is currently still in a strong phase.
Development Direction of the Chinese Sensor Market
According to the "2021-2025 China Sensor Industry In-depth Research and Investment Prospect Prediction Report" released by the Zhongtou Industry Research Institute: Under the general environment of the digital economy, with the promotion of new technologies such as digitalization, artificial intelligence, and the Internet of Things, 2020 ushered in the "digital year." How to embark on the path of digitalization is a question that every enterprise must consider. Among them, sensors play a huge role in the digital transformation and upgrading of enterprises. So, what are the development trends of sensors in the digital year?
I. Enterprise Development Focus. In the digital age, the requirements for data collection and processing are extremely high. The previous structural and fixed sensors can no longer meet the needs. Combined with new technologies such as artificial intelligence, sensors are becoming miniaturized, intelligent, networked, and multifunctional, gradually developing towards smart sensors and MEMS sensors, and becoming the focus of enterprise development.
II. Trends in Chinese Sensor Manufacturing. As a sub-sector of integrated circuits, sensors have an increasing demand for flexible customization, with long R&D cycles, complex materials and processes, and insufficient large-scale production.
In the future, integrated circuits will be a development trend, mainly reflected in design tools, model expression, testability settings, and process integration, through the integrated fusion of MEMS and integrated circuit custom simulation platforms. In manufacturing, establish an IP model to achieve mass production. Through quality testing, achieve analog-digital mechanism transformation. This will further promote the rapid upgrading of sensors.
III. Unicorns and Hidden Champions Emerge from Vertical Segmentation. Chinese sensor companies are mainly small and medium-sized enterprises with limited R&D and innovation capabilities, and there are many companies deeply cultivating vertical fields. Currently, the Internet of Things and Industry 4.0 markets are too large and fragmented. In 2020, more companies developing in existing business areas will grow into hidden champions, along with unicorns emerging from the innovative environment.
IV. The Chinese Sensor Industry Will Experience Steady Upward Growth. Sensors are one of the technologies that promote the rapid development of the Internet of Things and Industry 4.0, and China has long relied on imports. However, in recent years, with the strong support of favorable policies, the development of sensors has received much attention, and a number of high-quality sensor companies have emerged, forming a complete industrial system that integrates R&D, design, production, and application, promoting a steady increase in the output of domestic sensors.
V. A Clear Pattern of Sensor Industry Clusters in China. China's sensor industry initially formed five major industrial clusters in early 2017: the Yangtze River Delta, the Pearl River Delta, Northeast China, the Beijing-Tianjin-Hebei region, and Central China. The Yangtze River Delta region has 38% of listed companies, comparable to those in the Pearl River Delta, Beijing-Tianjin-Hebei, Northeast China, and Central China. As of January 2020, the Yangtze River Delta region has gathered more than 50% of smart sensor companies, making it undoubtedly the central region for the development of smart sensors.
VI. Competition in CMOS Image Sensors Will Enter the Final Stage. Driven by the rapid development of Internet of Things applications, in 2019, CMOS image sensors entered a stage of rapid market expansion in areas such as automotive applications, machine vision, facial recognition, and security monitoring. Sony accounts for more than half of the market share, forming a three-legged stand with Samsung and OmniVision Technologies.
VII. Optical Sensors Will Become a Driving Force for Innovation. The widespread application of the Internet of Things has driven the rapid development of the optical sensor market. It is expected that by 2026, the sales of optical sensors will reach $36 billion, including areas such as smart cities and smart agriculture. Structured light, active stereo vision, and ToF are the three main technologies for optical sensors. It is expected that in 2020, these three technologies will stabilize with the development of the Internet of Things.
VIII. Deeper and Broader Customized Solutions for Sensors. Due to factors such as function and application scenarios, sensors themselves have inherent customization characteristics. Traditional sensors can no longer meet customer needs. With the expansion of Internet of Things application scenarios, more functions and designs will emerge, and companies with customized sensor solutions and flexible production capabilities will be favored by OEM manufacturers in the future.
Nine, multi-sensor fusion technology is gradually emerging. Currently, multi-sensor fusion technology is mainly used in the fields of autonomous driving and robotics. The safety of autonomous driving requires redundant support from sensors to improve fault tolerance. In the future, multi-sensor fusion for autonomous driving will become the mainstream in the market, including wearable devices, health detection, and smart homes.
Ten, a wave of mergers and acquisitions is coming. Because sensors are the most basic industry, their industrial resources are quite substantial. TE acquired MEAS for US\$1.7 billion in 2014. In 2019, AMS acquired Osram for €4.6 billion and Sony acquired Toshiba's image sensor division for \$155 million. In 2021, the rapid development of China's sensor industry brought a certain impact to the global sensor market. At the same time, affected by the increasing demand for Internet of Things sensors, in order to ensure its own market share, international mergers and acquisitions will continue to increase.
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