According to IHS iSuppli’s China Research Service, as Chinese auto buyers become more mature, they increasingly demand safer cars, more fuel economy, and more driving pleasure, which will lead to strong growth in China’s auto semiconductor sales in 201214 %.

In 2012, China’s auto semiconductor consumption will increase from US$3.6 billion in 2010 to US$4.2 billion. By 2016, it will grow to 6.2 billion U.S. dollars, as shown in Figure 6.


Driven by several key factors, the compound annual growth rate of China's automotive semiconductor consumption before 2016 will reach 11%.

First, consumers increasingly value safety, fuel efficiency, and reliability, all of which require the use of semiconductors to monitor and control the system. Second, mid-range and premium cars with more semiconductor content are more popular than entry-level cars. Third, a large number of new automotive features have emerged to provide consumers with a better driving experience, including internal or external connectivity, infotainment, and comfort.

Automotive electronics market accelerates growth

The Chinese automotive semiconductor market has grown rapidly in the past few years. In 2010, China's auto semiconductor consumption increased sharply by 58% to reach US$3.2 billion. Demand from China's auto industry is strong, and the increase in Chinese consumer income and government stimulus policies have helped to increase car sales. All these factors are conducive to the expansion of the Chinese automotive electronics market.

However, at the beginning of 2011, the global economic situation became uncertain and consumption declined. At the same time, the Chinese government has removed subsidies, including those for the auto market. The massive increase in automobiles has also brought about problems such as pollution, traffic jams and parking difficulties, prompting the government to introduce policies to restrict car sales in big cities such as Beijing.

Last year, China’s total light vehicle sales, including light passenger cars and commercial vehicles, increased by only 3.8% to 17.6 million vehicles. This led to a slowdown in overall automotive semiconductor consumption growth to 12% and sales of $3.6 billion.