China Automotive Electronics Industry Chain, 2005（overview）

This report gives a comprehensive perspective into the current market conditions of China’s automotive electronics industry, the landscape of the enterprises competition and the relationships between the industrial chains. It also helps to understand the technical bottleneck of automotive electronic products and the changes of the market, and it analyzes the relationship between upstream vendors and downstream vendors and their market performance. It shows the status of demand and supply and the macro- environment for automotive industry, and it helps to gain insight into the functionalities of automotive electronic products and into the market opportunities. In order to make all those analyses, Research In China has dug up deeply information and data on more than hundreds enterprises concerned in automobile industry, translated and organized the related foreign reports and articles; and finally compiled this report.

The automobile sales (unit: 10 thousand ) and automobile electronics market scale (unit: RMB 100 million) changes from 2001-2005

Market structure forecast of China’s automotive semiconductor electronics from 2003-2007.(Unit: RMB 100 million)

There are more than 1000 Chinese automotive electronic components vendors, but most of them focus on segments with low technological contents, such as automotive audio systems and automobile communication. As too many vendors come into these segments, the supply exceeds the demand and some vendors have been suffering serious losses. However, the segments of engine electronics, chassis electronics, body electronics and others that are characterized by high technological contents and high added-value are almost all monopolized by foreign vendors and joint ventures.

At present, the government requirements for automobiles safety and environmental friendliness are increasingly strict; and the consumers expect a better driving experience, high performance vehicles, improved onboard entertainment, and appropriate facilities for office work; moreover, in China, the average expenditure on automotive electronics just accounts for 4.8％ of the total value of the car, whereas the global average expenditure is 26.2%. All of this means automotive electronics need to be more and more applied in China. Therefore, the potential for China's automotive electronics is huge and attracts many giants from industries such as home electronics, communications, etc.

In March 2004, Amoi announced the establishment of a joint venture with South East (Fujian) Motor Co., Ltd, to manufacture automotive electronics;

In April 2004, Motorola announced the set-up of a factory in Tianjin for manufacturing automotive electronic accessories;

In June 2004, Panasonic set up Tianjin Panasonic Automotive Electronic Development Co., Ltd, manufacturing automotive multimedia products, such as high quality audio and video products.

In June, 2004, Neusoft Group and Alpine Electronics (China) Co., Ltd jointly set up Neusoft Automotive Electronics R&D Center, providing automotive electronics products to BMW, Benz, etc.

In June, 2004, Guangdong Desay Group, who is mainly engaged in the business of disk player, audio and video, energy and optoelectronics display, announced huge investments into automotive audio industry and planned to take 2~3 years to establish a strong brand in the automotive electronic market.

In the first half of 2004, TCL stated that they would enter the automotive electronics market.