Taiwan's industrial PC (IPC) manufacturers are optimistic that the Chinese market is poised for recovery after a sharp decline caused by the dual impacts of the pandemic and geopolitical tensions. Despite the challenges, the market remains relatively large, driven by substantial infrastructure needs.
Industry leader Advantech and other IPC players have observed signs of a rebound in the Chinese market, although overall economic conditions remain uncertain. China's high acceptance of innovative applications, particularly in the AI sector, has also emerged as a significant growth driver.
However, Taiwanese IPC makers face a complex landscape in China, clouded by ongoing geopolitical tensions and the rise of local Chinese competitors. Advantech noted that while distribution channels still hold some inventory, market conditions are gradually improving. Although a full recovery to pre-pandemic levels may be difficult in the short term, a gradual return to normalcy could be anticipated.
DFI, another IPC player, believes the economic downturn has slowed the destocking process in the Chinese market compared to other regions. Nevertheless, the company expects a surge in rush orders, especially during the fourth quarter, as businesses seek to use up their annual budgets.
Other IPC vendors pointed out that while the Chinese market currently appears sluggish due to geopolitical factors, the relocation of manufacturing facilities, and economic downturn, its scale and potential cannot be overlooked. They suggested that once supportive government policies are implemented, the market could experience a rapid rebound.
Adlink Technology Chairman Jim Liu remarked that the Chinese market shows a stronger willingness to adopt new technologies, especially in intelligent applications, where the ecosystem is gradually becoming more robust. Liu noted that any IPC maker looking to capitalize on China's smart applications market must invest and plan accordingly.
Some IPC companies revealed that China is actively promoting the localization of its industries, from semiconductors to system equipment, with a growing trend toward adopting Chinese-made products. To remain competitive, they acknowledged the need to develop product lines tailored to local Chinese needs.
Many Taiwan IPC firms, including Advantech, have already invested in developing localized product lines in China. These efforts begin with semiconductor chips and extend to fully integrating components from local Chinese suppliers into their design and production processes. However, they face a dual challenge: satisfying the unique requirements of the Chinese market while simultaneously competing with increasingly aggressive local rivals.
Industry insiders indicated that Chinese IPC manufacturers have staged a strong comeback in recent years. Leveraging their cost advantages, these local firms have exerted significant price pressure on their Taiwanese counterparts. In response, Taiwanese IPC makers have no choice but to establish local supply chains in China, in addition to optimizing internal costs.
