Development of China's Sensor Industry: Analysis of Challenges and Forward-looking Strategies

Since the early 21st century, China has entered the information age, and sensors, as key components connecting the physical world to digital systems, have become the core drivers of industrial upgrading. In 2017, industry reports showed that the domestic sensor market had huge potential but exposed pain points such as technological blockades and slow industrialization. By 2026, with the deep implementation of "Made in China 2025" and the 14th Five-Year Plan, the sensor industry continues to expand, yet multiple challenges remain. Based on the latest industry data and Nexisense's practical experience, this article analyzes these challenges and proposes pragmatic strategies, providing a professional perspective.

Overview and Current Status of the Sensor Industry

Sensors convert non-electrical quantities (such as temperature, pressure, and gases) into electrical signals and are the foundational support for IoT, big data, and AI. According to their working principles, they can be divided into physical types (e.g., light-sensitive, force-sensitive) and chemical types (e.g., gas-sensitive), widely applied in industrial, transportation, and medical fields. By 2017, the global sensor varieties exceeded 26,000, with China accounting for approximately 14,000, mostly in conventional areas, while high-end medical and research sensors showed significant gaps.

By 2026, China's sensor industry has made significant progress. The latest data shows that the market size reached ¥179.6 billion in 2023, a year-on-year increase of 14.32%, and is expected to surpass ¥230 billion by 2025. Growth is driven by new energy vehicles, high-speed rail, and smart city projects. For instance, high-speed rail operation plans target 200,000 km by 2030, with hundreds of sensors installed on each train for real-time monitoring of tracks and environment. Nexisense, focusing on smart sensors, has integrated its NS series products into these applications, providing high-precision data acquisition and supporting multiple protocols such as Modbus and LoRa.

Market Size and Growth Drivers

China's sensor market is transitioning from low-end manufacturing to intelligent solutions. In 2021, the smart sensor market reached ¥105.76 billion, projected to reach ¥161.09 billion by 2026, with a CAGR of 8.8%. This growth is driven by policies and technological integration, such as the combination of MEMS processes and ICs, promoting miniaturization and networked sensors.

Within the industrial chain, upstream materials (e.g., silicon chips) are stable, midstream manufacturing is competitive, and downstream application demand is strong. The automotive sector is particularly prominent; a single new energy vehicle requires over 200 sensors for battery management and environmental sensing. Nexisense's pressure sensors excel in this market, with 0.1% FS accuracy, helping companies reduce energy consumption and enhance safety.

Technology Trends and Innovation Directions

Sensor technology is evolving toward intelligence. MEMS sensors, as mainstream, are now millimeter-scale while integrating multiple functions, such as vibration energy harvesting for self-powering. Future trends include digitalization and integration, e.g., networked sensors with AI algorithms that process data in real time and support 5G transmission.

In China, industrial clusters are forming around Shanghai, Beijing, and Shenzhen. The Shanghai Smart Sensor Industrial Park focuses on MEMS technology to address the domestic “China chip” gap. Nexisense actively participates in such parks, offering customized solutions and promoting industry-university-research integration.

Challenges Facing Industry Development

Despite progress, China's sensor industry faces structural challenges rooted in historical accumulation and technological gaps, affecting independent and controllable capabilities.

Dependence on Imported Core Technologies

Over 90% of mid- and high-end sensors depend on imports, such as IoT MEMS sensors mainly sourced from foreign companies. This leads to economic loss and threatens national information security. A 2017 report indicated that 80% of core chips were imported. Although improvements exist, high-end patents are still dominated by Europe, the US, and Japan. R&D cycles take 6–8 years with investments reaching hundreds of millions RMB, and low returns exacerbate dependency.

In automotive sensors, this issue is more pronounced. International giants dominate the market, and domestic companies often package imported chips for mid- and low-end products. Data security risks arise because sensor-collected terrain and physiological data involve privacy and national security, highlighting the need for localized storage.

Industrialization Bottlenecks and Scaling Issues

Small and fragmented enterprises are a persistent problem. Among 1,700+ companies, only 5% have output exceeding ¥100 million, and professional manufacturers are less than 3%. Aging processes and outdated equipment lead to unstable product quality, sometimes called "industrial handicrafts." Translating research into commercial products is difficult due to a disconnect between research institutes and enterprises.

Talent misalignment worsens the problem. Few researchers focus on foundational studies, professional training lags behind industrial needs, and key talents struggle to join SMEs. High financing costs and heavy tax burdens further constrain technology upgrades. Market-wise, imported products compete strongly, raising entry barriers, leaving domestic companies lacking in scale, quality, and price competitiveness.

Competitive Pressure and Innovation Challenges

The industry is fiercely competitive, resulting in "involution." Companies focus on cutting costs and prices while neglecting differentiated innovation. High R&D expenditure with long payback periods makes sustainability difficult for startups. Automotive sensors face high costs and deployment challenges, and some giants have shifted from LiDAR to millimeter-wave radar.

An aging population increases demand but exposes bottlenecks. Service robot markets are projected at ¥8–10 trillion, constrained by personalized health models. Sensors need to address system integration bottlenecks, enabling macro-to-micro perception.

Strategies for Industry Development

Addressing these challenges requires collaboration. Drawing on the 2017 "Three-Year Action Plan for Smart Sensors" and the current 14th Five-Year Plan, the following strategies are proposed:

Enhance Strategic Positioning and Policy Support

Make sensors a national strategic priority and establish special funds to support SME innovation. The Ministry of Industry and Information Technology can continue promoting smart solutions, combining MEMS and IC technologies for independent R&D. Tax reduction and financing support help companies overcome burdens. Establish a standards committee to accelerate sensor standardization and promote fair competition.

Build Ecosystems and Industry Alliances

Create a dual ecosystem: technological and market. Establish industrial parks like "Sensor Valley," fostering complete industrial chains through aggregation and mergers. Integrate government, industry, academia, research, application, and services to support continuous operations. Nexisense participates in similar alliances, offering SDK kits to facilitate upstream-downstream integration.

Strengthen Talent Development and International Collaboration

Increase investment in education to cultivate specialized talent. Enterprises can retain key teams via equity incentives. Encourage cooperation with international institutions to import technology and export innovation. For data security, establish encryption mechanisms and local centers to ensure compliance.

Innovation-driven and Application Expansion

Focus on miniaturization and intelligence, exploring new sectors such as elderly technology and smart agriculture. Nexisense’s NS-300 series sensors integrate ASIC circuits, support OTA upgrades, and are applied in high-speed rail and new energy vehicles, with response time<1ms and power consumption <10mW, enabling efficient management.

FAQ: Common Questions

When will China achieve full sensor independence?
By 2030, mid- and high-end self-sufficiency could reach 70%, accelerated through policy and innovation. Nexisense contributes to local supply chain development.

What is the core role of sensors in IoT?
As the data source, they support big data analysis and enable intelligent decision-making. Without sensors, there is no foundation for big data.

How to choose the right sensor?
Match parameters to the scenario, such as accuracy, operating temperature, and communication protocol. Nexisense provides consulting to ensure compatibility.

How do industry challenges affect companies?
Technological dependence increases costs, and competition lowers profits. Building ecosystems can turn these challenges into opportunities.

Conclusion and Outlook

China's sensor industry has grown from a foundational stage in 2017 to an expanded scale by 2026, showing strong vitality but still facing technological dependence, industrialization bottlenecks, and talent shortages. Through policy support, ecosystem building, and innovation-driven development, safe and independent growth is achievable. Nexisense, as a domestic brand, continues to focus on MEMS and smart applications, driving industry advancement. Looking ahead, with 5G and AI integration, sensors will usher in a broader era, helping China transition from a manufacturing power to an innovation leader.