As a core sensing component in the field of industrial automation, rotary encoders are responsible for collecting key data such as angle, position, and speed. They are an indispensable “perception nerve” for industries such as intelligent manufacturing and high-end equipment.
In recent years, benefiting from the transformation and upgrading of the domestic manufacturing industry and policy support, the domestic rotary encoder industry has achieved rapid growth, making significant progress in market scale, technological breakthroughs, industrial ecology, etc., while also facing challenges such as high-end market breakthroughs and cost pressures.
1. Current status of the industry: Steady expansion of scale and gradual technological breakthroughs
Currently, China’s rotary encoder industry is in a development stage of parallel growth of scale and technological upgrading.
From the perspective of market size, the industry maintains a steady growth trend. The market size in 2024 will be approximately 3.65 billion yuan, a year-on-year increase of 8.5%. It is expected to reach 4 billion yuan in 2025, with a year-on-year growth rate of 10%.
Looking forward to 2025 to 2030, the industry’s average annual compound growth rate is expected to remain above 8%. The market size is expected to exceed 23 billion yuan in 2030. The growth momentum mainly comes from the explosion of demand in downstream fields such as industrial automation, new energy vehicles, and medical equipment.
In the field of product structure and application, the industry shows an obvious trend of high-end and diversification.
The field of industrial automation is still the core application scenario, accounting for more than 60% of the total market share. With the advancement of intelligent manufacturing, the demand for high-precision and high-stability encoders continues to rise.
The field of new energy vehicles is growing rapidly. In 2024, domestic new energy vehicle sales will increase by 40% year-on-year, driving a surge in demand for vehicle-mounted encoders. It is expected that the market share in this field will increase from the current 15% to more than 30% by 2030.
In addition, demand from high-end fields such as medical equipment, aerospace, and semiconductors is also gradually released, driving the industry’s product structure to optimize toward high added value.
At the technical level, domestic companies have achieved a breakthrough from following to partially leading.
In the field of high precision, domestic companies have mastered core technologies such as MEMS, and the accuracy of some products reaches ±7 arc seconds, which is close to the international advanced level. In terms of reliability and integration, through material process optimization and independent chip research and development, product impact resistance and high temperature resistance have been significantly improved, and the market share of integrated encoders has increased year by year.
However, there are still shortcomings in the industry. Problems such as reliance on imported core components for high-end products and insufficient adaptability to extreme working conditions have restricted the in-depth advancement of domestic substitution.
2. Competition pattern: The rise of local companies, market stratification competition
The domestic rotary encoder market has formed a competition pattern in which “international brands dominate the high-end, and local companies segregate the mid- to low-end.” At the same time, local leading companies are accelerating their penetration into the high-end market, and their market share continues to increase.
From the perspective of competitive entities, they can be divided into three camps:
The first camp is internationally renowned brands, represented by Germany’s Heidenhain and Japan’s Omron. They monopolize the high-end market with their century-old technology accumulation and the advantages of the entire industry chain. They mainly serve precision manufacturing fields such as aerospace and high-end machine tools, and their product prices are generally more than 30% higher than similar domestic products.
However, with the technological breakthroughs of local companies, their market share has been slowly declining.
The second camp is local leading companies, which have formed unique competitive advantages.
Inovance Technology takes the synergy capabilities of the whole servo industry chain as its core and occupies 35% of the servo encoder market share, and is deeply tied to leading customers such as CATL and BYD; Eston focuses on special encoders for industrial robots, ranking first in the country in market share, and has significant technical barriers to impact resistance and high temperature resistance; Shanghai Yingshuang leads the market share in the field of high-end photoelectric encoders with 16 or more digits, and its technology benchmarks against HEIDENHAIN, supporting high-end equipment manufacturers such as Huazhong CNC.
Such enterprises gradually realize import substitution of high-end products by increasing investment in research and development.
The third camp is small and medium-sized local enterprises, which are large in number but small in scale. They mainly produce mid-to-low-end incremental encoders, with cost-effectiveness as the core of competition, and focus on general automation, consumer electronics and other fields.
Such enterprises have weak R&D capabilities and rely on outsourcing core components. Their profit margins are greatly affected by raw material price fluctuations and price wars, and there is an obvious trend of industry consolidation.
Overall, the market share of local companies is steadily increasing, and it is expected that the market share of local suppliers will increase from 45% to 65% from 2025 to 2030.
Policy support has become an important boost. “Made in China 2025” lists smart sensors as a priority development area. Local governments use special funds, tax incentives and other measures to promote corporate technological innovation and industrial chain improvement.
3. Future trends: intelligence, high-end, and scenario-based have become the core directions
With the deep integration of Industry 4.0, Internet of Things, and artificial intelligence technology, the rotary encoder industry will usher in all-round changes and present three major development trends.
First, intelligent upgrades are accelerating.
The integration of AI technology and encoders has become mainstream. By embedding AI algorithms, functions such as fault prediction, self-calibration, and noise filtering are realized, upgrading from passive sensing equipment to intelligent data terminals to provide support for predictive maintenance.
At the same time, the encoder is deeply integrated with the industrial Internet of Things ecosystem to realize real-time data transmission and remote monitoring to meet the digital needs of smart manufacturing.
Second, the substitution between high-end and domestic products is deepening.
The requirements for accuracy and stability of downstream high-end equipment continue to increase, driving the development of encoders towards sub-arcsecond accuracy, high dynamic response, and adaptability to extreme environments.
As domestic companies make breakthroughs in core chips, algorithm design, process optimization and other fields, the high-end market import substitution space will continue to be released. It is expected that the market share of high-end domestic encoders will increase to more than 40% in the next five years.
Third, scenario-based customization and lightweight development.
The demand for encoders in different industries varies significantly, and customization has become an important starting point for enterprise competition.
For example, the new energy vehicle field requires miniaturization and low-power consumption products, while the aerospace field emphasizes high reliability and anti-interference capabilities.
At the same time, the maturity of MEMS technology has promoted the development of encoders towards miniaturization and lightweight, and expanded their applications in emerging scenarios such as smart wearables and micro robots.
4. Leader in technological innovation: Tianshishizha’s road to breakthrough
In the wave of industry transformation towards high-end and high-precision, traditional photoelectric encoders are limited by their mechanical structure, making it difficult to break through in terms of upper limit of accuracy and environmental adaptability.
The Tianshishijiang Angle Sensor provides a new solution for the localization of high-end encoders with innovative technological paths, becoming a benchmark for technological innovation in the industry.
The Tianshi Time Gate subverts the logic of “spatial measurement” of traditional encoders, converts angle measurement into time measurement, and fundamentally gets rid of the constraints of mechanical factors such as marking accuracy and installation deviation.
Its static angle measurement accuracy can reach ±0.5 arc seconds, and its dynamic tracking error is controlled within 1 arc second, fully meeting the needs of high-end scenarios such as aero-engine blade processing and satellite antenna calibration.
In terms of environmental adaptability, the non-contact measurement structure avoids mechanical wear and extends the service life to more than 100,000 hours. It can work stably in the temperature range of -40°C to 85°C, 10g vibration environment and oil mist and dust conditions, solving the “delicate” pain point of traditional products.
In practical applications, the advantages of Tianshishizhao have been fully verified.
In the aerospace field, it is used in missile guidance component test turntables, reducing test errors by 40%; in the field of high-end machine tools, it is equipped with a five-axis linkage machining center to increase the positioning accuracy of the direct-drive turntable from 3 arc seconds to 0.8 arc seconds, breaking the foreign technology monopoly.
Compared with imported products of the same precision, the price of Tianshishizha is only 60%-70%, and it can provide customized development services, significantly reducing the costs and supply chain risks of domestic high-end equipment companies.
As a high-end sensor with completely independent intellectual property rights, Tianshishizha not only achieves independent control of core technology, but also leads the technical direction of the encoder industry.
In the future, with algorithm optimization and chip technology upgrades, Tianshi Time Gate is expected to achieve sub-arcsecond level accuracy breakthroughs, further expand its applications in new energy, semiconductors, medical equipment and other fields, inject strong impetus into the high-quality development of the domestic rotary encoder industry, and help China’s manufacturing to be fully upgraded to high-end and intelligent.
