Chinese companies have captured more global market share in 13 high-technology products and services, from electric vehicles to smartphones, Nikkei research shows, underscoring China’s outsized presence in global supply chains.
Out of 28 high-tech categories reviewed by Nikkei, China widened its share in 13 in 2021. Chinese companies lost market share in six categories and did not make the top five in the remaining nine.
The Biden administration’s recent toughening of export controls on advanced semiconductors shows the high level of tensions between the US and China in technologies seen as crucial to national and economic security.
The risk of a Taiwan crisis in the near future has added to the sense of urgency on securing Asian supply chains. But the Nikkei research shows realigning them is no easy task.
In the EV supply chain, Chinese battery leader Contemporary Amperex Technology, known as CATL, is the world’s top battery supplier, holding a 38.6% share last year. Its position has grown by more than 12 points since 2020. When combined with peer BYD, the two companies held a combined share of 46%.
BYD rose to become the fourth-largest EV manufacturer last year, climbing past the Renault, Nissan Motor and Mitsubishi Motors alliance. BYD has harnessed the strength of making batteries in-house to keep down its EV prices.
In the first half of this year, BYD became the second-largest EV maker by vehicle sales after Tesla.
When it comes to battery materials, Shanghai Energy New Materials Technology held a 28.7% share in separators. The company has used government subsidies to invest in expanding output. Asahi Kasei of Japan was a distant second at 10.7%.
These gains show China as a growing presence in EVs, both upstream and downstream, as the market is taking off.
In liquid crystal displays, a sector where Japanese and South Korean companies once waged cutthroat competition, China’s BOE Technology Group took the top share in both large panels for televisions and small and medium panels for phones and tablets.
In organic light-emitting diode (OLED) displays, Apple picked BOE as a supplier for iPhones, putting the company on the path to catch up with Samsung Electronics.
Chinese telecommunication company Huawei Technologies kept the top spot in wireless network base stations, but its share slipped to 34% from 38% under pressure from US sanctions.
Overall, Nikkei’s research spanned 56 categories of products and services, focusing on the top five companies in each category last year in terms of market share. Chinese companies were in the top five in 32 categories, gained market share in 21 categories and lost share in 11 categories.
With the Chinese economy struggling under the government’s zero-COVID containment policy, companies lost market share for construction machinery, as well as for large and midsized trucks.
The US held the top share in 18 categories, the most of any country. China was second with 15 top shares.
Japanese companies led in seven categories. Sony Group was the world’s leading supplier of CMOS image sensors. Sumitomo Chemical group was the top maker of polarizers for LCD panels.
Faced with escalating Sino-US tensions, “global companies are taking steps by separating supply chains into ‘China-bound’ and ‘non-China bound,'” said Masahisa Inagaki, a partner at KPMG FAS.
Among them is Japan’s Daikin Industries, which is building a supply chain for air conditioners that does not use Chinese-made parts and materials.
But “Japanese companies tend to think of these actions as an extension of their existing business continuity plans,” said Inagaki. “In order to minimize the impact from a crisis, they need to rethink their supply chains during normal times.”