Can the Growth of Electronic Measuring Instruments Outpace the Information Industry Market？
21 Jul 2024
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The test and measurement industry serves as the foundation for the development of the entire electronic information technology industry, being an indispensable link from cutting-edge exploration to large-scale production, leading the innovation direction of the entire information industry. However, with the increasing value of software in the test industry and the growing strength of tools like verification and simulation, can the market for test and measurement equipment outpace the entire information industry?
According to the data from Future Market Insights, driven by rapid technological advancements in telecommunications, aerospace, automotive, and healthcare industries, the compound annual growth rate of the test and measurement equipment market is expected to reach 5.6% by 2034. By 2024, the industry’s value is projected to be $356.844 billion, and it is likely to exceed$615.343 billion by the end of 2034. The demand for precise and reliable test and measurement equipment is also increasing to ensure quality and performance for businesses. However, this market size encompasses not only various electronic devices and instruments but also some basic metrology equipment, so it is not solely the market size of electronic test instruments.
As the most fundamental supporting industry in the development of the industry, the development of the test and measurement instrument industry is closely related to the economic situation. In recent years, the fastest-growing non-electronic test instrument industry has become the second largest test and measurement instrument sub-market after medical and scientific instruments. With the development of the entire electronic industry, due to the increasing complexity of electronic products and systems, the test and measurement equipment market is expected to continue its upward trend. The increasing complexity and precision of electronic systems have led to an increasing demand for complex testing equipment to ensure functionality, reliability, and compliance with industry standards and regulations. Given the role of advanced electronic test equipment in maintaining product quality, optimizing production processes, and reducing downtime, electronic test instruments are increasingly popular in the industrial sector.
In the industrial market, the prominence of Industry 4.0 and increasing automation also encourages enterprises in various industries to adopt these test and measurement equipment, as they need to continuously monitor and test connected devices and systems. Moreover, these devices are also used in industries such as aerospace, automotive, and healthcare, which have become profitable fields after the pandemic.
In fact, both in the industrial market and other application markets, the continuous trend of automation has also changed the way electronic test instruments and equipment are used. EEPW has observed that especially in recent years, with the emergence of artificial intelligence and machine learning algorithms, these algorithms can process the large amount of data generated by test and measurement equipment faster and more accurately than traditional methods. The integration of test and measurement equipment with artificial intelligence benefits the entire information industry, driving industrial innovation while promoting the vigorous development of the electronic test instrument market.
However, we must face the issue that the prices of high-performance precision test instruments needed for increasingly complex electronic systems are rising. Although the unit price performance has become cheaper, the prices of top-tier equipment remain uncontrolled. On the other hand, the operation of high-complexity test instruments is also a problem. Although various R&D expenses often cover the costs of these devices, the expenditure on test equipment in R&D costs is often the first to be compromised or reduced in unnecessary increments, especially during times of economic uncertainty. The most typical manifestation is that the test and measurement instrument market is largely dependent on the performance of industries such as automotive, aerospace, telecommunications, and industrial automation. Before the pandemic, these industries had shown a sustained growth rate for a long time. It is for this reason that the test and measurement instrument industry has experienced a long period of healthy growth.
In terms of the development of the test and measurement equipment market in specific countries over the next decade, the United States and China remain the two most important global markets for test instruments, especially electronic test instruments. India is undoubtedly expected to be the fastest-growing market, with a compound annual growth rate that could reach 8.3% by 2034. Currently, India has become the world’s fourth-largest economy and is likely to become the third-largest economy in the world within the next five years, thanks to its significant progress in the IT and electronics industries. The Indian government is vigorously promoting the comprehensive development of its national manufacturing and electronic information industry, which naturally creates a huge demand for test and measurement equipment in India. Additionally, the influx of multinational companies into India has also made a significant contribution to the test and measurement equipment industry in India.
In contrast, the United States is expected to see a compound annual growth rate of 3.1% in its test and measurement equipment market over the next decade. Despite the U.S. government’s continuous call for the return of manufacturing, the actual growth rate is substantial given the large base of the test instrument market. The U.S. market is being driven by advancements in areas such as autonomous driving, semiconductor manufacturing, automotive, telecommunications infrastructure, and the development of next-generation communication technologies and AI applications, all of which rely heavily on advanced electronic test equipment.
Similarly, the United Kingdom is likely to experience a slow compound annual growth rate of 2.2% in its test and measurement equipment industry from 2024 to 2034. The UK leads in high-tech sectors such as aerospace, defense, telecommunications, and renewable energy. The presence of industry giants in the UK has automatically created a significant demand for advanced test and measurement solutions for product development, regulatory compliance, and quality assurance, all of which have been driving the growth of the country’s test and measurement equipment market.
Returning to the initial question of whether the test and measurement instrument industry can outpace the growth of the information industry over the next decade, EEPW believes that, as a fundamental supporting industry, the test instrument industry should grow slightly slower than the overall information and electronics industry. On one hand, technological advancements have increased the utilization rate of fixed asset investments across the industry, with test instrument manufacturers also providing early upgrades for customer equipment. On the other hand, the lifespan of many test instruments is increasing, and the transaction volume of the second-hand instrument market is growing rapidly, with many refurbished devices being reintroduced into the market as more economical options. Furthermore, the proportion of hardware investment in modular equipment is gradually decreasing, while the value share of software and solutions is increasing, leading to a significant reduction in the cost of simply replacing boards.
However, from another perspective, if we include test-related software and modular solutions in the total value of test instruments, the integration of artificial intelligence with test solutions could inject new vitality into the entire test instrument market. The demand for new test solutions is becoming increasingly urgent, and testing applications themselves are a field that heavily relies on experience accumulation and often requires large models for various training and inference applications. EEPW believes that the demand for AI-enabled testing in the industry will likely explode before the actual application of AI in the industry, suggesting that the growth rate of the electronic test instrument industry may not be inferior to that of the information and electronics industry.
Finally, as electronic system designs become increasingly complex, the value of various software-based verification and simulation is on the rise. The proportion of testing and verification in the early stages of the design cycle in terms of time and R&D costs is rapidly increasing. If we also include the various verification and simulation in the early and mid-stages of software development under the broader application scope of electronic test instruments, the growth rate of the entire electronic test application market will be significantly higher than that of the entire information and electronics industry.
(Source: Electronic Products World)