China surpassed the US. in 2018 as the world’s largest sub-regional market for Programmable Logic Controllers (PLCs) with revenue estimated at $1.7 billion.
That’s according to IHS Markit | Technology, now a part of Informa Tech.
There was a spike in PLC demand in 2017, but things turned for the worse in 2018 for PLC purchasers. That means the growth rate in PLC revenues for all of 2019 is likely to reach a low point in China.
Revenue growth for PLCs in China surpassed 20% in 2017 and will be flat for all of 2019, then slowly rise through 2022 to less than 5%, according to the analysts’ forecast. A worse case scenario predicts there could be negative revenue growth into 2022.
The analyst firm noted that sales and production of cars have continued to slump, placing pressure on manufacturing of PLCs. China’s robotics industry saw a contraction in sales and production in October 2018 after almost two decades of rapid growth of more than 20% a year.
Analyst Rita Liu said the U.S.-China trade war has significantly reduced investor confidence in the Chinese market, and some manufacturers are considering shifting operations from mainland China to India, Thailand, Vietnam, Indonesia and even Mexico.
She said that there will be more investment by the oil and gas industry in the next years, while electric vehicles and renewable energy businesses will drive China’s industrial automation market “to some degree” during the next five years. The Chinese government’s “One Belt and One Road” infrastructure investment initiative will also help PLC market growth.