China: Modular Instrument Battle Zone

Sharpen your swords.  Two battles are brewing in China- the battle between traditional and modular instruments, and the battles within the modular segment itself between vendors and standards. This makes the China automation market one of the hottest and most dynamic test and measurement prizes in the world.

For those who want background on the China market, I highly recommend viewing Frost & Sullivan’s webcast “Growing Market for General Purpose Test Equipment in China” while it is still posted.  Special recognition should be given to the presenters: Frost and Sullivan’s Wei Wei, and Evaluation Engineering’s Rick Nelson.  Jessy Cavazos also answered questions in the Q&A.

It is 50 minutes well spent. I’ve been to China more times than I can count, and the quantitative information presented by F&S matches what I’ve witnessed at customer sites and trade events.  I won’t repeat their presentation, but instead go directly to the bottom line:

VXI and PXI modular sales were $42M in 2010 out of the $389 GP market, as defined by F&S, 10.7% of the total.

F&S forecasts in 2017 that VXI and PXI modular sales will be $143M out of $714M GP market, or 20% of the total.

Do the math.  Basically, they project modular instruments to grow at a 19% rate, compared to a 9% rate for the total industry, and 7% for traditional instruments through mathematical extrapolation. By 2017, only oscilloscopes will be a larger product category than modular systems, and even then the gap will be small.

Can modular instruments achieve this? Absolutely! I’m on the record for predicting China modular growth this year of 25%, though based on a less rigorous modeling method.

Here’s why. Look at the industries F&S reports are driving China growth: aerospace/defense, communications, industrial automotive, and electronic manufacturing. These are also the key industries driving the adoption of modular systems.  Whether attracted to modular formats for size, speed, or flexibility, these segments have a natural match with modular solutions. I’d add digital and semiconductor in the mix too.

The bottom line is that F&S is forecasting open modular instrumentation to outgrow traditional instruments in T&M’s fastest growing region by 12 points.  Think about that.  This is setting up an epic battle between vendors, touched on in the report. It is also setting up a battle of standards.  VXI has the largest installed base, though was recently exceeded by PXI sales, which are projected to deliver the incremental growth.  Meanwhile, AXIe is a wildcard, particularly in semiconductor and aerospace/defense.

The battle has begun for test and measurement’s fastest growing market.  Choose your swords.

Larry

By Larry DJ

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