China's automotive semiconductor market to rise by 14% in 2012

IHS says the growth is as a result of the growing demand for safer, more fuel efficient vehicles that are more enjoyable to drive. According to the analyst, China's automotive semiconductor consumption in 2012 will reach $4.2billion, up from $3.6bn in 2010. By 2016, IHS forecasts revenue for automotive semiconductors in the nation will grow to $6.2bn. Alex Liu, analyst at IHS, believes there are several key factors contributing to China's automotive semiconductor consumption, which IHS forecasts will expand by an 11% compound annual growth rate through 2016. "First, consumers are becoming more aware of safety, fuel efficiency and reliability features that all require semiconductors to monitor and control systems," said Liu. "Second, mid range and premium vehicles that integrate more electronics content are gaining more popularity compared to entry level cars. Third, there has been a boom of new vehicle features that is contributing to an overall better driving experience for consumers, including inter or external connections, infotainment and convenience." China's automotive semiconductor market has experienced fast growth during the past few years, with automotive semiconductor consumption in China expanding 58% in 2010 to reach $3.2bn. The country's automotive electronics market had been fueled by booming vehicle demand, and a surge in sales that had resulted from the rising incomes of Chinese consumers, combined with the government's stimulus policies. "In early 2011, however, worldwide economic conditions became uncertain, and consumption weakened," noted Liu. "At the same time, the Chinese government ended its currency and subsidy policies, including those for the automotive market. The mass influx of vehicles also caused pollution, traffic jams and parking problems, pushing the government to release a policy to limit the fast growth of vehicle sales in popular cities such as Beijing. "Last year saw total light vehicle sales in China, including light passenger and commercial cars, growing by just 3.8% to reach 17.6million units. This, in turn, caused the total semiconductor consumption in automotive to slow to 12%, with revenue of $3.6bn."