Chinese Semiconductor Outlook Part I: IoT in China

Chinese Semiconductor Outlook Part I: IoT in China

As the Internet of Things (IoT) is taking shape, one country is standing out in the leading position of IoT development. That is China. By the end of 2014, China had already adopted 74 million connections between machines, representing approximately a third of the global base 336 million by 2020 . The number is expected to reach, providing a strong base for China to develop an extensive IoT network .

In 2012,Ministry of Industry and Information Technology In 2012, published their 12th Five-Year Plan for IoT to lay out the development of IoT in China. Some key policies include supporting research in key technologies, setting up IoT standards, developing supply chain surrounding IoT technology, and more. The government is planning to invest 5 billion yuan ($800 million) in the IoT industry by the end of this year and the total market value is expect to be 1 trillion yuan ($166 billion) by 2020 .

One of the dimensions China is focusing on is the health care networks in remote areas. A State-owned enterprise zone, Chengdu Internet of Things Technology Institute in Sichuan province, is developing a heath care system where people who live in rural villages can get a diagnosis and prescription from a doctor in a large hospital by stepping into a telephone booth-sized “health capsule” . So far, the institute has installed 11 “health capsule” within a satellite city near Chengdu .

On a broader level, China has big plans too which focuses on setting international standards for the new technology. “It’s a new area, and as such, a place where China can be at the starting line or ahead of the starting line.” said Mark Natkin, director of Marbridge, a technology consulting firm in Beijing . In September 2014, the international standard “Reference Architecture for IoT” proposed by China was approved from the ISO/IEC JTC1 for standards establishment. This was initiated by ISO/IEC JTC1 WG7 (Sensor Networks WG) and will have participation from the United States, Korea, Canada, and Australia .

The exponential development of IoTs in China is going to generate new business opportunities for many industries— mobile service providers, start-ups in smart technologies, etc. With the immense population size and enormous economic volume, there are many needs for IoT.

“Even though they already represent a significant market for M2M in China, the penetration of point of sale terminals in China is still relatively low—Chinese suppliers have emphasized to IHS that at least 95% of small merchants in China still do not use any sort of point of sale system—creating vast potential growth opportunities within the industry” says Josh Builta, Senior Analyst at IHS .

The massive potential demand for IoT devices in China will translate into business opportunities across the supply chain in the global electronic industry. Connected cars, child tracker, health networks, and wearables are the sectors that will be the front runners in IoT because tens of millions of China’s consumers will benefit from the convenience and information brought by those new technologies. On the component level, microprocessor, sensors, and micro-controllers are going to be hot products on the market.

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