Chinese general-purpose test equipment market to cross $700 million in 2017

China has recovered rapidly after the market slowdown in 2009.

Wei Wei, Research Analyst, Measurement & Instrumentation, China, Frost & Sullivan -- Test & Measurement World, 12/8/2011 9:05:58 AM

The slowdown of the global economy adversely impacted the Chinese general-purpose test equipment market in 2009. Compared with other regions in the world, however, the Chinese market recovered more rapidly. The total market generated revenue of $389.0 million in 2010, an increase of 20.5% over 2009. The market revenue is expected to reach $713.5 million in 2017, with an expected CAGR (compound annual growth rate) of 9.1% from 2010 to 2017.

The Chinese general-purpose test market is dominated by traditional instruments whose market share was 89.3% in 2010. The traditional instruments market is segmented into the following sections:

• oscilloscopes,
• signal generators,
• arbitrary waveform generators,
• logic analyzers,
• network analyzers,
• spectrum analyzers,
• power meters,
• digital multimeters, and
• electronic counters.

The traditional instruments market as a whole is mature and the growth is expected to be moderate during the forecast period, though certain segments such as high-end digital oscilloscopes are expected to witness above-average growth. One exception is the logic analyzer segment, which is expected to have a negative CAGR during the forecast period.

The traditional instruments market is segmented into oscilloscopes (OS), signal generators (SG), arbitrary waveform generators (AWG), logic analyzers (LA), network analyzers (NA), spectrum analyzers (SA), power meters (PM), digital multimeters (MM), and electronic counters (EC). VXI and PXI modular instruments round out the market. Source: Frost & Sullivan.

The growth of the telecommunications industry will be a significant driver for market growth during the forecast period. During its 12th Five-Year Plan period (2011-2015), China plans to invest around 1 trillion yuan ($150 billion) in 3G and 4G mobile telecommunications. According to the plan, 500,000 3G base stations will be built. Meanwhile, China will also accelerate the development of 4G by conducting large-scale experiments on its own TD-LTE technology and putting it into commercial use if possible. The rapid deployment of 3G and 4G technologies in China is expected to be a growth booster for test equipment such as spectrum analyzers.

Other key market drivers include the sustaining demand from the aerospace and defense industries, the expansion of electronic devices, and the R&D globalization in China. Additionally, high-end customers are concerned with equipment features such as bandwidth, frequency, and accuracy. The need for better performance will also drive market growth.

Chinese customers in the industrial manufacturing and communication segments desire increased functionality and more features in test equipment, yet at a lower price. Their price sensitivity is on the rise. Consequently, the vendors of traditional test equipment are competing aggressively to offer lower prices while keeping the performance at higher level. The vendors are also developing integrated instruments that have multiple functions, enhanced speed, and advanced accuracy. The increasing pricing pressure and integrated instruments are the main challenges to the traditional stand-alone test instruments.

Modular instruments are also playing a growing role in the Chinese general-purpose test equipment market. The VXI modular instrumentation standard is experiencing a declining market trend. The VXI test equipment market accounted for $18 million in 2010. The revenue is expected to decrease at a CAGR of -2.9% from 2010 to 2017, and reach $14.7 million by 2017. In contrast, PXI is currently the dominant standard for modular instrumentation and has a double-digit growth trend in China. In 2010, the market revenue accounted for $23.7 million. This market is expected to grow at a 27.2% CAGR from 2010 to 2017, and reach $128 million by 2017.

Key factors expected to drive PXI market growth include its capacity, flexibility, and ease of use, as well as the support from leading test instrument vendors and customer focus on the price-performance ratio. Compared with traditional stand-alone instruments, PXI-based systems offer more flexibility, so the end users can customize the test equipment, although customer familiarity with traditional box instruments is likely to impede the application of PXI-based instruments.

Frost & Sullivan reports 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-to-high growth in China. Continuous developments in wireless applications are increasing the need for PXI instrumentation in the communications industry. Meanwhile, the aerospace and defense industry is also anticipated to generate sustained demand. T&MW

---

Editor's Note: Frost & Sullivan provided updated numbers for the first paragraph after we posted the story. The story now contains those corrected numbers.