Editing by Greg Gao

MCU (Microcontroller Unit) is one of the core components of an intelligent control system. Chinese MCU suppliers are actively going into this sector, replacing imported ones.  However, they face homogenized market competition, and the price war becomes frequent, especially for the general-purpose MCU. They should differentiate competitive advantages, offer more specific MCUs for vertical fields with large market demand, and improve the ecosystem. These are the key viewpoints of a JW Insights analyst article.

Chinese MCU vendors accounted for a large proportion on the “2021 Top 100 Chinese Semiconductor companies List” updated by JW Insights recently. They have achieved substantial revenue growth in 2021. Among them are 14 general-purpose MCU companies, including Silan Microelectronics(士兰微), GigaDevice(兆易创新), SinoWealth(中颖电子), ChipSea(芯海科技), BYD Microelectronics(比亚迪半导体).

MCU’s primary function is to process and control signals and it is widely used in many fields such as household appliances, consumer electronics, medical equipment, computers, industrial control, and automotive electronics.

In recent years, driven by the booming Internet of Things, automotive electronics, and other markets, the global MCU shipments and market size have maintained steady growth, reaching $15.7 billion in 2021. It is expected to reach $18.8 billion in 2024, with a CAGR of 6.19%, according to IC Insights.

Several international suppliers, including  Renesas Electronics, NXP, Infineon, STMicroelectronics, Microchip Technology, dominate the global MCU market, and the industry concentration is relatively high.

Under the continuous escalation of Sino-US trade frictions and the tight supply of imported chips, China’s domestic substitution is driving the market share growth of local MCU brands.

The most popular 32-bit MCUs use ARM cores-based. Although major companies have launched MCUs based on RISC-V architecture but with relatively immature ecosystem. The overall shipments are still dominated by ARM core-based MCUs. For the Chinese lMCU brands, their product portfolio, manufacturing process, and performance parameters of are almost completely comparable to imported ones. As a result, the product homogeneity is very high.

This resulted in the low innovation ability of Chinese local vendors, and they can only copy popular products in the market. Their products are easy to replace, inevitably lowering the loyalty of clients and customers. If local suppliers cannot increase product value in software, solutions, and application directions, they will inevitably fall into a price war.

Launching specific MCU will be one of the effective ways for Chinese domestic vendors to make breakthroughs. Some local MCU brands are already foraying into specific MCUs, including chips used in home appliance control, motor control, smart water meters, smart electricity meters, fast charging, and TWS.

The MCU market will develop in the direction of energy-saving, intelligence, high-security, light and compact, and multi-function integration. With the advent of the era of the Internet of Everything, more high-growth and segmented application markets will emerge, promoting highly innovative special-purpose MCUs in the industry. With the advantage of localization, Chinese MCU players have abilities to respond faster to market demands and make breakthroughs with such MCUs, JW Insights article concludes.