Reasons for The Rapid Development of Industrial Ethernet Switches in China

Industrial Ethernet switch is also called Industrial Switch, that is, Ethernet communication equipment applied to industrial Internet and industrial digital intelligent control field. Because of the standard TCP/IP network, it has good openness, wide application, high performance and high reliability, Ethernet communication technology has become the main communication standard in industrial control field.

China's industrial Ethernet switches are in the growth period of the product life cycle and are widely used in transportation, power, metallurgy, coal, petrochemical, water treatment and other industries. The development of industrial Ethernet technology, the large demand of downstream traffic, power and other users, the continuous enrichment of product supply in the middle and low-end markets, and the wider application of managed switches are the direct reasons for promoting the development of the industrial Ethernet switch market. Specifically, it is shown in the following five aspects:

1. The macro environment of China's economy is conducive to the development of the industrial Ethernet switch market. The economic structure has been continuously optimized, and emerging industries such as the digital economy have flourished. Investment in high-tech industries, agriculture, social services and other key areas continued to grow rapidly. The equipment manufacturing industry and high-tech industry are growing rapidly, the network construction is developing rapidly, new business types and new models are emerging, and the digital economy has become the most dynamic and important part of the national economy. China has built the world's largest and technologically leading network infrastructure. Mobile networks have achieved breakthroughs from 3G, 4G synchronization, and 5G leadership. In December 2021, the Internet penetration rate will reach 73%, and industrial Internet applications have covered 45 major categories of the national economy. In 2021, the annual output of new energy vehicles will be 3.677 million, an increase of 152.5% over the previous year; The output of integrated circuits was 359.43 billion, up 37.5%.

2. Development of industrial Ethernet technology. In recent years, industrial Ethernet technology and applications have grown rapidly. From the technical development background, industrial Ethernet gradually replaces the field bus. According to statistics, the proportion of fieldbus, industrial Ethernet and industrial wireless has changed from 71%/29%/0% in 2014 to 35%/59%/6% in 19. Industrial Ethernet has replaced fieldbus with low-cost, efficient communication and flexible expansion capabilities. At the same time, thanks to the promotion of low latency and high stability wireless technologies such as 5G and WiFi6, industrial wireless technology has come to the fore. The development of industrial Ethernet technology will certainly promote the development of industrial Ethernet switch, the core equipment of Ethernet.

3. Promotion of national investment on infrastructure construction. From January to October this year, the national investment in fixed assets increased by 5.8%. With the decline of real estate investment, the investment in infrastructure continued to grow. From January to October, it grew by 8.7%. The investment in manufacturing industry grew steadily, and from January to October, it grew by 9.7%. Major infrastructure projects such as railways and highways and urban power grid transformation are the focus of infrastructure investment. At the same time, they are also an important growth area of the industrial Ethernet switch market.

4. Wider application in old industries and new fields. Industrial Internet can realize the comprehensive and deep integration of industrial systems, optimize enterprise R&D, production, management and service modes, create a new industrial ecology, and achieve cost reduction, efficiency increase, quality improvement and innovation. In 2021, China's industrial added value will increase by 19.1% on a year-on-year basis. Against the background of the trend of industrial automation and intelligent upgrading, China's industrial Internet market will grow at a compound rate of 16% in three years from 20 to 22, breaking through the market scale of trillion yuan. Taking the power industry as an example, the promotion and development of digital substation technology provides a broader platform for the development of industrial Ethernet switches.

5. Replacement of commercial Ethernet switches in industrial areas. Industrial Ethernet switches are more suitable for industrial occasions. With the continuous improvement of industrial Ethernet switches and users' higher requirements for stability, commercial Ethernet switching opportunities adopted by industrial users in the early stage are gradually replaced.