Market Overview

Size of the domestic market of CAE for mechanical engineering in 2020 dropped by 1.7% from the previous year to attain 82,255 million yen (based on the sales at businesses). As seen in the figure for 2021 that indicates year-on-year rise by 2.9% to 84,654 million yen, the market is on track for recovery.

Due to behavioral restrictions to prevent the spread of the novel coronavirus, economic activities declined sharply from 2020 to 2021. Nonetheless, because Japanese manufacturers continue to invest in ICT environment, which includes migration to cloud solutions that became necessary in accordance with the increase of telework, CAE software vendors managed to maintain revenues from software license and support/maintenance services. Despite the economic slowdown, the domestic manufacturers of CAE systems for mechanical engineering managed to keep the sales shrinkage by only around 2%.

Noteworthy Topics

Influence of Soaring Energy Prices

Because of the Russian invasion of Ukraine, Japanese economy is being slammed by the surging energy prices. As the war is raging with no end in sight, the restart of nuclear power plants and the use of renewable energy are taken into consideration as countermeasures to lack of energy.

To resume nuclear power plant operation, the facility must clear the inspection by the Nuclear Regulation Authority (NRA Japan) that checks its conformity to the new regulatory requirements, which requires huge amount of technical documents including analytics of CAE. Therefore, the demand for the analytics regarding product design and development is expected to grow.

Meanwhile, in the field of renewable energy such as solar power and wind power, offshore wind farm is garnering attention globally, particularly in Europe. Development of offshore wind farms has been accelerated in Japan, too, as the “Act of Promoting Utilization of Sea Areas in Development of Power Generation Facilities Using Maritime Renewable Energy Resources” came into effect in 2019. Under the circumstances, big opportunities may be expected for computer aided analytics in design/development of offshore wind power farms hereafter. In addition, rise in demand is also anticipated for designing and developing power generation facilities using ocean wave energy and geothermal energy.

Furthermore, construction of petroleum processing plant and petrochemical plant is actively underway. Designing such plants requires not only thermal fluid analysis and structure analysis, but also 1D CAE and computational chemistry.

Considering all of these situations, it is fair to say that soaring energy prices is presenting a new business opportunity for CAE for mechanical engineering.

Future Outlook

The domestic market size of CAE for mechanical engineering in 2022 is forecasted to grow by 5.4% from the previous year to reach 89,185 million yen. As Japanese yen continues to weaken in 2022, business performance of export-oriented manufacturing industries like automotive and electronics are showing signs of considerable recovery. The situation may give a boost to the sales of CAE for mechanical engineering.

Moreover, due to the penetration of BIM (Building Information Modeling) - a concept of utilizing workflow using one 3D model for research, design, and construction of a structure or building, which can also span into operation and management of buildings – adoption of CAE has been increasing in the construction industry. The demand for CAE for the construction industry is poised to grow significantly in the future.

Research Outline