Analysis of the Industry Chain and Development Trends of the Upstream, Midstream, and Downstream of China's Industry 4.0 Intelligent Factory

In recent years, sensors have been in a stage of transition from traditional to new types of sensors. The characteristics of new sensors are miniaturization, digitization, intelligence, multifunctionality, systematization, and networking. They not only promote the transformation of traditional industries, but also lead to the establishment of new industries, which is a new economic growth point in the 21st century.

Whether it is "Industry 4.0" or "Made in China 2025", the most fundamental change is actually intelligent production, and in Gu Rongxiang's view, sensors are the key to the entire intelligence. Because of the core aspects of "Industry 4.0" and "Made in China 2025"

Analysis of the Industry Chain and Development Trends of the Upstream, Midstream, and Downstream of China's Industry 4.0 Intelligent Factory

Analysis of the Intelligent Factory Industry Chain
　（1） Upstream Industry - Sensors
In recent years, sensors have been in a stage of transition from traditional to new types of sensors. The characteristics of new sensors are miniaturization, digitization, intelligence, multifunctionality, systematization, and networking. They not only promote the transformation of traditional industries, but also lead to the establishment of new industries, which is a new economic growth point in the 21st century.
Whether it is "Industry 4.0" or "Made in China 2025", the most fundamental change is actually intelligent production, and in Gu Rongxiang's view, sensors are the key to the entire intelligence. Because the core aspect of "Industry 4.0" and "Made in China 2025" is intelligent manufacturing, whether networked or digitized, the forefront will be intelligent, but all of these will be inseparable from sensors
　　The sensor industry, recognized as a high-tech industry with promising development prospects both domestically and internationally, has attracted worldwide attention for its high technological content, good economic benefits, strong penetration ability, and broad market prospects.
　　From 2007 to 2014, China's sensor industry achieved good development, with the overall industrial output value of the industry showing an upward trend, and its proportion in GDP remained between 0.10% and 0.15%.
　　Under a series of policy guidance and support from the government to vigorously strengthen the development and application of sensors, China's sensor industry is facing good development prospects, and the future growth space is promising.

　（2） Upstream industry - Industrial Ethernet
Industrial Ethernet, as an efficient local area network, has been responsible for functions such as sensor data transmission and production equipment control since its inception. It is an important component of modern industrial automation production systems and the foundation of factory informatization. Its construction has become the core of smart factory construction.
If the automation of the third industrial revolution is only the application of information technology to the production process as an object. Industry 4.0 significantly expands the application of information technology, giving rise to the concept of "smart factories". Its key technology is information technology.
Industrial Ethernet, interconnectivity, real-time control, and ultimately achieving security and energy efficiency will be the core technology of smart factories. Specifically, this includes the implementation of M2M for autonomous and coordinated operations through the networking of production equipment, the application of big data obtained through the network, and the collaboration between business management systems such as development, sales, ERP, PLM, SCM, and actual production processes.

Because modern smart factories have four key points: firstly, they need to connect all networks to obtain data. The second is to have intelligent machines. The third is big data, which connects all devices and people and transmits all data in large quantities to smart terminals. The fourth is to analyze and extract application trends from the data to improve the detection and prediction level of device status. To achieve high-speed transmission and big data, ensuring real-time performance, security, and energy efficiency becomes crucial. This is precisely the essence of building industrial Ethernet.

　（3） Midstream Industry - Industrial Software
　　Smart factories will be the main line of innovation in industrial software products. At the machine level, improve the intelligence level of equipment, enhance performance and production efficiency; At the workshop level, strengthen communication and collaboration between machines to improve the coordination level of the production line; At the factory level, optimize and schedule production resources such as multiple workshops and production lines to achieve dynamic matching of production capacity, supply chain, and market demand.

（4） Midstream Industry - Industrial Robots
In the past two years, with the proposal of national strategic emerging industries and the steady promotion of the integration of industrialization and informatization, the field of intelligent manufacturing equipment in China has received widespread attention from the whole society. With the increasing intrinsic demand for product performance improvement and the rise in labor prices in China, the pressure for industrial transformation and upgrading continues to increase. Industrial robots, as representatives of intelligent manufacturing, are playing an increasingly important role in the process of industrial transformation and upgrading.

Industrial robots, as high-tech equipment, are of great significance in promoting national defense and military, intelligent manufacturing, resource development, and cultivating and developing the future robotics industry. At present, some emerging mid to low end markets are also rapidly expanding, such as the field of construction machinery, and the market demand for some traditional labor-intensive enterprises such as petrochemicals, grain, building materials, fertilizers, feed and other fields is also rapidly developing. In recent years, by expanding downstream application services and exploring traditional markets to accept emerging production methods, fields such as home appliances, rail transportation, and ships have become the main battlefields for the future application of robots. In new fields of general industrial applications, such as photovoltaic industry, power battery manufacturing industry, food industry including alcohol, beverage, dairy, sugar, as well as chemical fiber, fiberglass, hardware polishing, metallurgical casting, medicine and other industries, there is room for the application of industrial robots.

　　（5） Downstream Industry - Intelligent Logistics
　　In the "2016-2020 China Intelligent Factory In depth Research and Investment Prospect Forecast Report" by China Investment Consulting, it is pointed out that intelligent logistics is a core component of Industry 4.0 and the ultimate solution to reduce social warehousing and logistics costs. In the framework of Industry 4.0's intelligent factory, intelligent logistics warehousing is located at the backend and is the core link connecting the manufacturing end and the client end. Compared with developed countries such as the United States and Japan, the proportion of warehousing costs per unit of GDP in China is 2-3 times that of other countries, and this difference has gradually expanded in recent years. The intelligent logistics warehousing system has advantages in labor cost savings, rental cost savings, and management efficiency improvement (we estimate that automated warehousing can save at least 70% of land and 80% of labor while ensuring the same storage capacity), and is the ultimate solution to reduce social warehousing and logistics costs.

Under the influence of multiple factors, intelligent logistics equipment has become the best choice for enterprises to replace manual labor and seek transformation and upgrading in many fields, and the logistics field is no exception. Intelligent logistics equipment has gradually developed in this context. Although in the short term, adopting intelligent logistics equipment will lead to increased investment for enterprises, in the long run, the savings in labor costs and efficiency improvements brought by intelligent equipment will continue to benefit enterprises.

The development trend of smart factories
Smart factories will be more intelligent, flexible, and dynamic.
The organization of manufacturing processes will be different and closely linked to the entire production chain - from suppliers to logistics to product lifecycle management - across various departments of the enterprise.
Each production step will be seamlessly connected. The process of impact will include: factory and production planning; Product development; Logistics; Enterprise Resource Planning (ERP); Manufacturing Execution System (MES); Control technology; Various sensors and actuators on site.

In smart factories, machines and equipment will have enhanced self optimization and autonomous decision-making capabilities. This is in stark contrast to the situation of running fixed program operations today.

[Original text translated from China Investment Consulting Network]

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