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The internet of things: the next growth engine for the semiconductor industry

The semiconductor industry is being driven by rapid technological innovations in the Internet of Things (IoT). According to PwC, semiconductor revenues from IoT through three core capabilities including sensing, connectivity, and computing, are expected to reach THB 1.19 trillion (USD 35 billion) in only two years. In providing the right technology as an important building block for IoT systems, these core capabilities are integrated to collect, process, and transmit signals and data for IoT products and applications.

According to PwC, semiconductor revenues from IoT through three core capabilities including sensing, connectivity, and computing, are expected to reach THB 1.19 trillion (USD 35 billion) in only two years.

Sensing

With the growing numbers of smartphone devices and their continued advances over the last decade, touchscreens and camera modules are some of the first sensors to be adopted in the market. However, nowadays the variety of sensors is rapidly expanding to new functions such as measuring food calorie composition and human health indicators.

IoT semiconductor revenue from sensing devices is expected to reach THB 238 billion (USD 7 billion) by 2019, a substantial growth rate of 42% from 2014 to 2019. Advanced manufacturing technologies can integrate the functionality of sensors, actuators, and integrated circuits into miniaturized form, making them suitable for use in a variety of applications within smartphones and wearable devices serving as key growth drivers for sensors. Other IoT applications in the healthcare and automotive sectors are also witnessing increased adoption of small sensors. ROHM, a global manufacturer of semiconductors, also sees sensors playing an important role in the automotive industry as the adoption of self-driving cars and electric vehicles take shape, a market that is expected to grow by 4-5% annually.

Connectivity

In being integrated in an increasing number of devices and applications, connectivity is a key component required in IoT systems for both for consumer and enterprise infrastructure devices. The market for connectivity in IoT applications is expected to continue growing at 27% annually, between 2014 and 2019.

With the skyrocketing use in smartphones, mobile data traffic is driving growth in mobile infrastructure equipment, promising an increase in network capacity and faster data transmissions. According to We Are Social, a global media agency, the rise in the number of global mobile Internet users and  faster connection speeds have all combined to deliver a 50% year-on-year increase in data traffic volumes in 2017.

Computing

IoT will also drive higher growth in microcontroller units (MCUs). In 2019, unit shipments of IoT embedded processors are expected to grow five times faster than the rest of the embedded processing market.

Growth from MCU-based devices is increasing as a result of higher computing requirements which are becoming increasingly popular from advanced real-time sensors for automotive, industrial, and medical applications. The global market for MCUs in the automotive sector increased 8% in 2016 from features such as self-parking, advanced cruise control, and collision avoidance. Another growing market for MCUs is the integration of connectivity and sensors, which allow many home appliances and industrial devices to connect to the Internet.

Moving towards a fully-connected world

IoT will have a substantial impact on the number of units that are driving the semiconductor industry. As the world is rapidly moving towards increased connectivity in day-to-day activities, semiconductor manufacturers have to adopt to these underlying core capabilities in the IoT ecosystem to be able to compete in the global arena.

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