CICC has released a research report stating that the industrial control sector is experiencing a weak overall recovery, but structural opportunities stand out. Since 2026, manufacturing profits have rebounded but overall capacity expansion remains cautious. Against this backdrop, the automation market size grew 1.5% year-on-year in 1H26, with the recovery mainly driven by capital expenditure in advanced manufacturing industries and equipment upgrades, which accelerated sales growth of products strongly correlated with high-end equipment such as servo systems and CNC. Domestic leaders are leveraging emerging industry expansion to increase market share, while deepening overseas expansion opens up growth space. CICC's main views are as follows:
By industry, the OEM market contributed the main increment, with machine tools, batteries, electronics, and industrial robots being the primary growth exposures. The growth divergence between OEM and project-based markets widened, with 1H26 growth rates of +7.7% and -2.1% year-on-year respectively. In the OEM market, driven by advanced manufacturing, equipment upgrades, and inherent industry opportunities, downstream machine tools, batteries, electronics, and industrial robots grew +8%, +35%, +14%, and +24% year-on-year in 1H26, together contributing 94% of new increments. In the project-based market, chemicals accounted for 26% with a -7% year-on-year decline as the main drag, while power grew +12% year-on-year but failed to offset the decline.
By product, servo systems and CNC benefited from multi-axis and high-end machine tool upgrades with leading growth rates, and domestic substitution accelerated. In 1H26, servo and CNC sales grew +21% and +24% year-on-year respectively, with domestic share rising +3.7 and +4.9 percentage points year-on-year to 64% and 46% in 2Q26. Small and medium-to-large PLC sales grew +15% and +12% year-on-year, supported by capacity expansion in discrete manufacturing such as electronics and system-level automation such as batteries, with domestic share rising +3.0 and +1.3 percentage points to 38% and 18%. HMI and low-voltage inverters, due to dispersed downstream applications, saw sales growth diluted by traditional manufacturing at only +10% and +5% year-on-year, with domestic share rising +2.5 and +0.5 percentage points to 64% and 48%. The bank believes that among high-end equipment, products with higher per-unit value and stronger technical barriers offer greater growth exposure and stronger domestic substitution opportunities. Risks include downstream demand falling short of expectations, insufficient transmission of raw material price increases, and intensifying competition.
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