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Growing Market For General Purpose Test Equipment In China

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A presentation on the growing market for general purpose test equipment in China.

A presentation on the growing market for general purpose test equipment in China.

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  • 1. Growing Market for General Purpose Test Equipment in ChinaWhich Industries Will Drive Sales over the Next 5 Years? 中國未來新興產業對測量儀器市場的推動研究 Presented by: Wei Wei, Industry Analyst Jessy Cavazos, Industry Director Test & Measurement Group Guest Speaker: Rick Nelson, Executive Editor Evaluation Engineering December 8, 2011
  • 2. Today’s Presenters Wei Wei, Industry Analyst Test & Measurement Frost & Sullivan Rick Nelson, Executive Editor, Evaluation Engineering 2
  • 3. Agenda: Wei Wei, Frost & Sullivan 1 Market Overview 2 Market Drivers and Restraints 3 Revenue Forecast: Product Categories and Trends 4 Competitive Analysis 5 End-user Segments and Growing Potentials 6 Strategic Emerging Industries during the 12th Five-Year Plan 7 Strategic Emerging Industries: Opportunities for the End-user Markets 3
  • 4. Market OverviewTotal General Purpose Test Equipment Market: Revenue Total General Purpose Test Equipment Market: Percent Forecast (China), 2010-2017 of Revenues by Product Type (China), 2010 PM EC AWG 2.0% 1.0% 800.0 VXI 2.4% 4.6% 713.5 LA 700.0 4.7% Os 30.5% PXI 600.0 6.1% 527.7Revenue ($ Million) 500.0 NA 389.0 7.1% 400.0 300.0 MM 200.0 12.4% SA 100.0 SG 15.4% Os: Oscilloscopes 13.8% 0.0 SG: Signal generators AWG: Arbitrary waveform generators 2010 2014 2017 LA: Logic analyzers NA: Network analyzers Note: All figures are rounded; the base year is 2010. SA: Spectrum analyzers Source: Frost & Sullivan PM: Power meters MM: Multimeters EC: Electronic counters VXI/PXI: VXI/PXI-based instruments 4
  • 5. Market Drivers and Restraints Total General Purpose Test Equipment Market: Key Market Drivers and Restraints (China), 2011-2017 1-2 years 3-4 years 5-7 years Communication End Users drive market demand Steady Demand from Aerospace and Defense IndustryMarket Drivers Emergence of New Markets drives market growth Chinese Government aids growth of high- tech enterprises Expanding Use of Home Electronic Appliances R&D globalization translates into demand for test and measurement equipment in China Used and Rental Equipment Curtail New Product DemandMarket Restraints Developing Customized Product and Service Increases Costs Uncertainty in China’s Economy Multi-functional Equipment is Preferred over Stand-alone Equipment Pricing Pressure impedes revenue growth Impact: High Medium Low Source: Frost & Sullivan analysis. 5
  • 6. Revenue Forecast by Product Type General Purpose Test Equipment Market: Percent of Revenues by Product Type , 2010-2017 100% 90% 80% 70% 60% 50% Traditional Modular 40% 30% 20% 10% 0% 2010 2011 2012 2013 2014 2015 2016 2017 Note: Traditional test equipment includes oscilloscopes, signal generators, arbitrary waveform generators, logic analyzers, spectrum analyzers, network analyzers, power meters, multimeters, and electronic counters. Modular instruments include VXI and PXI-based instrumentation. Source: Frost & Sullivan analysis. 6
  • 7. Competitive Analysis - Market Share Total General Purpose Test Equipment Market: Total General Purpose Test Equipment Market: Percent of Sales, China, 2010 Types of Competition, China, 2010 Agilent Tier 1: Large, multinational, publicly Others Technologie traded or privately held companies. s - Global presence - Multiple products in diverse segments - Lead the market in some product segments AnritsuCorporation Tier 2: Medium-size international or Fluke regional companies Corporation - Offer products for a specific niche Rohde & Schwarz Tektronix Inc segmentOthers include: , LeCroy Corporation, National Instruments Corporation, - Offer some price advantages to caterYokogawa Electric Corporation, RIGOL Technologies Inc, Aeroflex Inc, KeithleyInstrument Inc, ADLINK Technology Inc, Teradyne Inc, Giga-tronics Inc, VTI local customersInstruments Corporation, and so on. Major local test equipment manufacturers: RIGOL Technologies Inc, Ningbo Zhongce Electronics Co., Ltd., Atten Instruments, Uni-Trend Group Limited, Siglent Technologies, The 41st Institute of China Electronics Technology Group Corporation, and so on. Note: All figures are rounded. Source: Frost & Sullivan analysis. 7
  • 8. Key End-user Segments Communications Aerospace and General Purpose Defense Test Equipment Industrial Automotive Electronic Manufacturing OthersOthers = Educational Institutions, Government R&D Laboratories, Hospital Electronics, Power Measurement Applications, Repair and Maintenance, Chemical industries, etc. Source: Frost & Sullivan analysis 8
  • 9. End user Segments: Growing Potentials General Purpose Test Equipment Market: Growing Potential by End-user Segment , 2010-2017 High Potential Medium Potential Emerging Applications Communications TD-LTE New Energy Auto Aerospace & Defense Semiconductors Green Engineering Consumer Electronics Industrial & AutomotivePotential Potential Education & Medical Denotes Long Term Potential Source: Frost & Sullivan analysis 9
  • 10. Strategic Emerging Industries during the 12th Five-YearPlan Contribution of the Emerging Industries to the New- Overall GDP, China, 2010-2020 generation Information Technology New High-end 16 Equipment Materials Manufacturing 14 12 Share in GDP (%) The 12th 10 Five-year Plan 8 2011-2015 New-energy Biology Cars 6 4 2 Energy Saving and 0 New Energy Environment Protection 2010 2015 2020 Source: National Development and Reform Commission of the PRC 10
  • 11. Strategic Emerging Industries:Opportunities for the End-User Markets New-generation Information Technology • China is particularly interested in developing the next- generation information networks, mobile communication, and the Internet. • The purpose of next generation Internet project is to gain a significant position in the future development of the Internet through the early adoption of IPv6. • The government plans to invest in R&D of the "Internet of things" and cloud computing, and develop digital and virtual technologies. Communications • China intends to build 500,000 3G stations. By the end of the 12th FYP period, this number is expected to reach 1.2 million. • Large-scale TD-LTE field trial has been conducted in several cities. Network operators are ready to implement TD-LTE and deploy it over 3G networks. Commercial trials of TD-LTE network will start in 2012. 4G network will be built from 2014 when TD-LTE is mature for commercial use. • It becomes necessary for the vendors to develop products with increased functionality to match these new digital standards and technologies. Source: National Development and Reform Commission of the PRC 11
  • 12. Emerging Strategic Industries:Opportunities for the End-User Markets (Continued) High-end Equipment Manufacturing • High-end manufacturing industries will strive for breakthroughs in aviation equipment, satellites, rail transportation, marine engineering, and intelligent manufacturing equipment. • As for aviation equipment, the manufacture of large aircraft will be accelerated. Regional aircraft and universal helicopters will be developed vigorously. • China will also strengthen space transportation and navigation systems to boost the satellite industry. Aerospace and Defense • The increasing defense budgets are focused on advancements in communication systems, satellite, and aerospace technology. • The first flight of the narrow-body airliner C919 is expected to take place in 2014, with deliveries scheduled for 2016. • The 2nd generation of Compass navigation system is planned to offer services to customers in APAC by 2012. • The Chinese commercial aerospace EMS provider market is expected to reach $2.97 billion by 2017, which offers a market opportunity to high-end test equipment. Source: National Development and Reform Commission of the PRC; Frost & Sullivan P5DD-28 study 12
  • 13. Emerging Strategic Industries:Opportunities for the End-User Markets (Continued) New-energy Cars • Under the 12th FYP, China will update the new-energy vehicle industry by integrating two major technologies of electric vehicles and hybrid electric vehicles. • The annual production volume of pure electric vehicle will reach 500 thousand units by the end of 2015. • China will invest around 100 billion RMB ($15 billion) over the next 10 years to support new energy automobile production in order to make China the world’s largest new-energy automobile production country. Industrial Automotive • This segment comprises of manufacturers of electronic components and OEMs. • Production of passenger vehicles in China ranked first in the world since 2009 and is expected to continue to witness rapid growth till 2020. • Test equipment such as oscilloscopes and multimeters are the key components of On-Board Diagnostics system. The demand for test equipment will increase due to the growth of automotive industry. Source: National Development and Reform Commission of the PRC; The Ministry of Industry and Information Technology 13
  • 14. Emerging Strategic Industries:Opportunities for the End-User Markets (Continued) New Energy • The renewable energy industry in 12th FYP will focus on wind power, solar photovoltaic power, and hydroelectric projects. • Meanwhile, the development of smart grid will be accelerated to adapt to the new energy projects. Fixed asset investment of smart grid is expected to be $376.7 billion in 2015. • Wind power capacity only contributed 4.6% to the total installed power capacity in China in 2010 and will grow steadily. The solar PV power is also likely to witness rapid growth in the next five years. • By the end of 2020, the renewable resource will contribute 15 percent of total energy. Wireless Communication • Wireless communication is expected to be a significant complement to the optic fiber telecommunication that is currently used in the grid power systems. • Based on the wireless technology, remote monitoring system for wind power could understand the real-time system status, rapidly inspect system fault, and improve the reliability. • The testers can be used to validate the reliability and performance of complex algorithms used in wind power technologies. Solar power manufacturers also need simpler, faster ways to perform photovoltaic device output performance tests. Source: National Development and Reform Commission of the PRC: Frost & Sullivan GIL 2011 14
  • 15. Other Key Growing Markets Electronics Manufacturing • The applications of electronic devices is overwhelming in people’s ordinary life. Electronic products and the inner components need to undergo testing. • Market growth was also led by improvement in the semiconductor industry. Strength in the computers and semiconductor business reflected the growing demand for cell phones and smart devices. Wireless Connectivity in High-speed Railway/Automobile • 3G network is currently available in the high-speed railway system. Since the train moves through a number of provinces, it means different 3G operators will impact network coverage and therefore signal performance. • Automobile manufacturers are developing wireless technology within vehicles, as well as between vehicles. Others • Numerous multinational corporations are establishing R&D facilities in China. • The educational sector such as universities and engineering schools also continues to expand in China. This sector is price conscious and requires lower price for durable testers. 15
  • 16. Agenda: Rick Nelson, Evaluation Engineering 1 Test Equipment Vendors Serving China—Agilent Technologies 2 Test Equipment Vendors Serving China—Tektronix 3 Test Equipment Vendors Serving China—Rohde & Schwarz 4 Test Equipment Vendors Serving China—Anritsu 4 Modular Instruments in China—Forecast 5 Modular Instruments in China—Vendors 6 Modular and Instrument Interconnect Standards to Watch 16
  • 17. Test Equipment Vendors’ Participation in China Agilent Technologies •Agilent (originally Hewlett-Packard) co-founder David Packard first visited the People’s Republic of China in 1977 as a member of a non-governmental committee. Packard wanted his company to be the first electronics company to share in a technology business venture in China. •An HP Representative Office opened in China in 1981. •HP Labs and the State Science and Technology Commission of China established a high-tech joint research program in 1995. •Agilent announced the China Communications Operation (CCO) in Beijing to serve Chinas growing wireline and wireless communications industry in 2002. •Agilent and Datang Telecom Group announced in October 2011 that they have established the TD-LTE-Advanced Joint Research Lab. The new lab is the second project created by the two firms. 17
  • 18. Test Equipment Vendors’ Participation in China Tektronix •In 2010, Tektronix China launched its High Speed Serial Test Lab in Shanghai, Beijing, and Shenzhen to provide the customers with pre-compliance test support and consultancy for their HSS designs. •Tektronix China has just launched four joint labs with local dealers to provide hands-on solutions specifically for power test applications in China, including applications involving LEDs, converters, and inverters. Additional joint labs are planned. •Tektronix instruments have been deployed in CCTV, for nation’s first 3-D trial channel. •Tektronix China has won several orders from China’s 985/211 universities in 2011. •Tektronix has just finished its 2011 “Tektronix Innovation Forum” across APAC in more than 10 cities in China, Taiwan, Korea and ASEAN countries, and the company is planning more events for 2012. 18
  • 19. Test Equipment Vendors’ Participation in China Rohde & Schwarz •Rohde & Schwarz ended its last past fiscal year with a revenue of EUR 1.58 billion, representing a 25% increase over last years level of EUR 1.26 billion. Rohde & Schwarz said it profited from positive developments in the wireless communications market, particularly in the U.S. and China, with those two countries being among the top contributors to total group revenue. •In June 2011 China Mobile Research Institute and Rohde & Schwarz announced they would conduct joint research on TD-LTE testing technology. •In February 2011 Rohde & Schwarz said it offers a complete product portfolio for developing and manufacturing chipsets, user equipment, and infrastructure equipment as well as for network planning, setup, and monitoring to speed the rollouts of LTE-FDD and TD-LTE networks—with one goal, in part, to serve about 60 million LTE users in China alone by the year 2015. 19
  • 20. Test Equipment Vendors’ Participation in China Anritsu •Anritsu serves the Chinese market with products having worldwide applicability, including the new MA24105A in-line peak power sensor, which provides a range of power measurement capability over a frequency range of 350 MHz to 4 GHz. •Anritsu offers a portfolio of instruments that can serve TD- SCDMA/HSPA applications, including signal analyzers and generators as well as field test equipment such as the Cell Master image courtesy of Anritsu Cell Master. . 20
  • 21. Modular Instruments in China From Frost & Sullivan Research, "Modular Instrumentation Market in China—An Insight" (25 July 2011): •"Primary research indicates an increased interest from China in PXI." •Modular market growth: from $42.4 million in 2010 to $57.7 million in 2017. •More than 50% of 2010 modular instrument market represented PXI. •VXI persists in legacy aerospace/defense installed base. •Frost & Sullivan believes that the market share of VXI-based instrumentation is likely to continue to gradually decline during the forecast period while PXI-based instrumentation is expected to witness medium/high growth in China. 21
  • 22. Modular Instruments in China PXI Vendors: •National Instruments, which pioneered PXI. •Agilent, which significantly increased its penetration into the PXI market in 2010. •Aeroflex, which offers PXI modules and traditional instruments for RF/wireless test. •ADLink, which offers data-acquisition modules •Teradyne, which offers PXI instruments for mil/aero applications. PXI module image courtesy of National Instruments 22
  • 23. Modular Instruments in China National Instruments’ Perspective on PXI •NI is offering platforms and design tools to engineers and scientists who need to build test-and-measurement or industrial control systems in China as well as worldwide. Such tools serve broad applications, but NI does see intensive adoption in consumer electronics, automotive, and avionics industries. •NI says its software-defined modular platform can accelerate innovation in emerging industries such as green energy and next-generation telecommunications. For example, on this years PXI Technology and Application Conference (PXI TAC), Professor Xiaohui Duan from Peking University gave a keynote speech introducing a "triple play” research project based on NI PXI platform. •NI sees PXI modular instruments gaining more awareness and adoption and becoming a mainstream automated test and control platform in China. Professor Shenghe Sun, and expert in automated test and control in China, gave a keynote speech on this years PXI TAC conference and indicated PXI fits the trend of instrumentation development. 23
  • 24. Modular Instruments in China PXI challenges and benefits: Feature Challenge Benefit Backplane- Requires chassis, power One chassis, power based. supply, and controller—an supply, and controller can investment that can reach serve multiple several thousand dollars instruments; backplane before any measurement permits synchronization capability is added. and high data rates. “The software is PXI modules lack familiar One developer can create the instrument.” knobs and displays of a simple, easy-to- traditional instruments; understand “go/stop” developer must know program “pass/fail” user interface like NI LabVIEW, Geotest that can serve multiple ATEasy, Agilent VEE. technicians. 24
  • 25. Modular Instruments in China Other Instrument and Instrument-Interconnect standards: •LXI. Many instruments now come with an LXI (LAN Extensions for Instrumentation) to replace or augment old interfaces like RS-232 and IEEE-488 GPIB. With Ethernet connectivity, LXI instruments support coordinated measurements among separate instruments dispersed over wide geographical areas. •USB. This ubiquitous interface for PCs is appearing on many instruments, and USB modules are available that convert PCs into oscilloscopes or other instruments. •AXIe (AdvancedTCA with extensions for instrumentation and test). AXIe is a relatively new standard based on the Telecom Computing Architecture carrier-grade backplane and interconnect specification. AXIe instrument image courtesy of Agilent Technologies 25
  • 26. Conclusions Communication and wireless Leading multinational broadband will continue to spur companies are actively the market growth. develop business in China and are likely to continue their dominace. Aerospace & Increasing capabilities of Defense increase modular Instruments drives market opportunities for Conclusion the market demand. high-end test equipment. PXI is being supported by Other strategic emerging leading companies. The industries in the 12th FYP flexibility and the lower cost increase opportunities for test will ensure its broader measurment products. application. 26
  • 27. Next Steps Develop Your Visionary and Innovative Skills Envision Your Future and Succeed Growth Partnership Service with Growth Workshops www.frost.com/growthpartnership www.frost.com/growthworkshop Growth Opportunity Newsletter Share your growth thought leadership and ideas orKeep abreast of innovative growth opportunities join our GIL Global Community www.frost.com/news www.frost.com/joingil 27
  • 28. Your Feedback is Important to Us What would you like to see from Frost & Sullivan?Growth Forecasts?Competitive Structure?Emerging Trends?Strategic Recommendations?Other? Please inform us by “Rating” this presentation. 28
  • 29. Follow Frost & Sullivan on Facebook, LinkedIn,SlideShare, and Twitter http://www.facebook.com/FrostandSullivan http://www.linkedin.com/companies/4506 http://www.slideshare.net/FrostandSullivan http://twitter.com/frost_sullivan 29
  • 30. For Additional InformationRick Nelson Wei WeiExecutive Editor Research AnalystEvaluation Engineering Measurement & Instrumentation(617) 504-3285 (86) 10-6598-9600 x 328rnelson@evaluationengineering.com wei.wei@frost.comJessy Cavazos Kiran UnniIndustry Director Research DirectorMeasurement & Instrumentation Measurement & Instrumentation(325)-695-6332 (210) 247-2495jcavazos@frost.com kiranunni@frost.com 30