With the continuous increase in the number of IoT devices and the widespread application of artificial intelligence technology, the demand for AIoT SoC chips will continue to grow. The reason for the steady expansion of the Chinese AIoT SoC chip market is the rapid increase in downstream demand in the industry chain, which drives the expansion of the AIoT SoC chip industry and its rapid growth.
AIoT SoC chip industry definition
The Intelligent Internet of Things (AIoT) is a concept that emerged in 2017. AIoT = AI (Artificial Intelligence) + IoT (Internet of Things), aiming to endow terminal devices with intelligence. An AIoT SoC chip refers to a SoC chip used in the main controller of AIoT devices. It is a chip that integrates multiple functional modules such as a processor core, memory, input/output interfaces, and a controller. AIoT SoC chips not only meet the needs of intelligent upgrades in consumer electronics but also enable emerging skills such as AI processing, audio/video processing, and intelligent voice. They are applicable to fields such as smart home appliances, IoT, smart homes, smart industries, smart cities, smart warehousing, and wearable devices.
AIoT SoC chip industry classification
The Internet of Things (IoT) architecture is divided into four layers from top to bottom: the perception layer, the transmission layer, the platform layer, and the application layer. Processor chips collect and process external information within these layers, providing data integration. In the perception layer, AIoT chips include SoCs, MCUs, communication chips, and sensors.
AIoT SoC chip industry characteristics
As a new trend in the Internet of Things (IoT), AIoT has the potential to integrate with various industries and will play an important role in "smart+" industries such as smart internet, smart manufacturing, smart education, smart finance, smart home, and smart healthcare. The characteristics of the AIoT SoC chip industry include: (1) highly integrated products and a trend towards intelligence; (2) expanding application scenarios and diversified user needs; and (3) the development of the IoT industry has directly promoted the explosive growth of the AIoT SoC chip industry.
Highly integrated and trending towards intelligence: AIoT SoC chips integrate multiple functional modules, including CPU, GPU, DSP, VPU, bus, interfaces, and even power management modules and control modules for various external devices. Furthermore, AIoT SoC chips typically integrate multiple AI modules, capable of processing audio and video data. Compared to MCUs, they better meet the high computing power and low power consumption requirements of AI, enhancing the interactive experience and intelligence level of IoT devices.
Expanding application scenarios and diversified user needs: The data deluge brought about by ubiquitous sensing and the Internet of Things will deeply integrate with various industries, giving rise to the Industrial Internet of Things (IIoT). Many specialized application scenarios, such as security monitoring, autonomous driving, and online healthcare, have high requirements for real-time data transmission and low latency. Furthermore, due to their increasing integration into people's daily lives, the need for privacy protection is also extremely urgent. AIoT SoC chips are widely used in AIoT application areas such as smart audio and video, smart homes, smart security, and commercial offices. In addition, due to the diversity and complexity of application scenarios, AIoT SoC chips need to be developed and optimized for specific application scenarios.
The development of the Internet of Things (IoT) industry has directly spurred the explosive growth of the AIoT SoC chip industry: with the continuous increase in the number of IoT devices and the widespread application of artificial intelligence technology, the demand for AIoT SoC chips will continue to grow. Since being officially listed as one of the first seven strategic emerging industries to be cultivated by the state in 2010, China's IoT industry currently boasts a leading market growth rate globally.
AIoT SoC chip development history
AIoT SoC chips have evolved from analog to digital, from processing to analysis and recognition, and then to deep learning. During this process, the Artificial Intelligence of Things (AI) has received significant national attention, and related companies have made substantial progress in the development and application of AIoT SoCs. With advancements in chip technology, AIoT devices have now transitioned from "standalone intelligence" to "interconnected intelligence," and their applications are expanding from household goods to industrial applications.
AIoT SoC chip industry chain analysis
The upstream of AIoT SoC chips mainly includes semiconductor material suppliers, semiconductor equipment suppliers, and EDA tool suppliers. These suppliers provide AIoT SoC chip manufacturers with the necessary production tools and materials, while also offering technical support such as design, simulation, and testing. Some well-known companies in this segment include semiconductor material suppliers like TSMC and UMC, semiconductor equipment suppliers like Applied Materials and ASML, and EDA tool suppliers like Synopsys and Cadence. The midstream of AIoT SoC chips mainly refers to the chip design stage. This stage requires a high level of technological accumulation and innovation capabilities; some well-known companies in this segment include Huawei, HiSilicon, and Unisoc. The downstream of AIoT SoC chips mainly includes smart hardware manufacturers and system integrators.
In the upstream of China's AIoT SoC chip industry, lithography machines are the core technology for chip manufacturing. The global market is monopolized by ASML, Nikon, and Canon. China's chip industry, affected by sanctions, needs to strengthen the research and development of lithography machine technology and promote domestic substitution. AIoT SoC chips have wide applications in the smart field, and Chinese manufacturers are gradually entering the market, with technological developments including algorithm optimization and low-power design. In this segment, chip design companies need to design AIoT SoC chips that meet specific functional and performance indicators based on the needs of downstream application areas. Downstream applications of AIoT SoC chips can be divided into consumer-driven, policy-driven, and industry-driven, covering multiple fields such as smart mobility, smart wearables, smart cities, and smart industry.
AIoT SoC chip industry scale
The Chinese AIoT SoC chip market grew from RMB 22.9 billion in 2017 to RMB 95.002 billion in 2022, with a compound annual growth rate of 32.81%. The market size is expected to continue to expand and reach RMB 279.359 billion in 2027.
The reason for the steady expansion of China's AIoT SoC chip industry is: (1) The rapid increase in downstream demand in the industry chain has driven the expansion of the AIoT SoC chip industry and the rapid growth of the industry. Taking smart furniture, a downstream product of AIoT SoC chips, as an example, the market size reached RMB 517.6 billion in 2023, an increase of 302.80% compared with 2018. The growth rate is rapid, and the increase in smart home products can bring huge market growth to AIoT SoC chips.
(2) AIoT SoC chips involve multiple technical fields, such as chip design, communication protocols, and data security. Continuous technological innovation has become an important factor driving the development of AIoT chips. With the rapid development of the Internet of Things, the demand for AIoT SoC chips is also showing an increasing trend. In terms of chip design, technologies such as compression algorithms, power optimization, and integration improvement are constantly evolving to meet the demand for small, low-power, and high-performance AIoT SoC chips. In 2023, Amlogic launched its new generation T-series high-end chips, which adopt 12nm process, support 8K decoding, are compatible with multiple formats, and have intelligent super-resolution technology. They are widely used in smart terminal products such as TVs, OTT, and streaming media. The T-series SoC chip solution has been widely used in smart terminal products of well-known domestic and foreign companies and operators such as Xiaomi, Haier, TCL, Skyworth, Seewo, Best Buy, Amazon, and Epson.
In the next five years, the Chinese AIoT SoC chip market will show a steady growth trend, for the following reasons: (1) The localization process is accelerating. For many years, the Chinese AIoT SoC chip market has mainly relied on imports, but in recent years, the localization process has accelerated, and domestic chip manufacturers such as Rockchip, Hengxuan Technology, and Allwinner Technology are competing to develop AIoT SoCs for specific application scenarios. (2) With the continuous upgrading and innovation of the domestic semiconductor industry, the quality and performance of Chinese AIoT SoC chip products will also be greatly improved, thereby better meeting the needs of the mid-to-high-end market and helping the mid-to-high-end market of AIoT SoC chips to increase both volume and price.
AIoT SoC Chip Competitive Landscape
The AIoT SoC chip market is characterized by a vibrant and diverse competitive landscape, with major chip manufacturers actively expanding their presence in the AIoT field and gradually increasing the localization rate of the market. However, this has also intensified market competition. Representative Chinese AIoT SoC chip manufacturers include Rockchip, Amlogic, Allwinner Technology, Actions Semiconductor, Hengxuan Technology, Huawei HiSilicon, MediaTek, and Realtek, among others. These companies are actively developing AIoT SoCs focused on specific application scenarios.
The competitive landscape of China's AIoT SoC chips is formed by the following factors: (1) Strong demand for domestic production: In the past, China's AIoT SoC chip market mainly relied on imports, but in recent years, the country's demand for domestic chip production has become increasingly strong. Domestic companies have invested heavily in research and development to catch up with leading foreign companies. This demand for domestic production has not only increased market competition but also promoted the rapid development and innovation of technology. Leading global AIoT SoC chip manufacturers include Intel, Qualcomm, Kneron, Espressif Systems, Renesas, and Semifive.
(2) Diverse application scenarios: Due to the continuous expansion of the AIoT field, numerous application scenarios are involved, such as smart home appliances, smart homes, smart cities, and smart security. Each scenario has different requirements for AIoT SoC chips. This has led to fierce market competition and market fragmentation. For example, in the field of smart set-top box chips, the main market players include Amlogic, Goke Microelectronics, MStar, HiSilicon, and MediaTek.
The entry barriers for China's AIoT SoC chip industry will increase in the future, making technological innovation the core competitiveness. AIoT SoC chip technology is innovating rapidly, with new technologies and products constantly emerging. Companies need to continuously invest in R&D to keep pace with technological development, meet market demands, and maintain a long-term competitive advantage. Furthermore, Rockchip, Starchip, Goke Microelectronics, Hengxuan, and Allwinner all have annual R&D investments exceeding 400 million yuan. However, in terms of R&D expenditure as a percentage of revenue, Actions Semiconductor, Hengxuan, Allwinner, and Rockchip have the highest R&D investment ratios, all exceeding 25%.
