IC insights cuts its IoT growth forecast by $1.9 billion

11 September, 2016

The IoT sector is forecasted to generate a demand of $29.6 billion for semiconductors in 2019. The company cuts its outlook for connected cities

The IoT sector is forecasted to generate a demand of $29.6 billion for semiconductors in 2019. The company cuts its outlook for connected cities940cacc3-e256-4ffb-9cdd-449d54bc110f

The semiconductor industry is undergoing a profound change. Some of its traditional growth engines such as PC’s and mobiles are waning, while new sectors such as data centers, Io and autonomous cars are on the rise. These changes are changing the semiconductor industry, as manufacturers are adjusting their product palette for a new age.

One of the fastest growing fields is “the internet of things”. The rate of “things” connecting to the internet rapidly exceeds the rate of people connecting to the internet. Actually, the yearly rate of new things connecting to the internet is six times that of human new connections. This trend has a huge effect on the semiconductor market.

Connected cities declining, smart cars are on the rise

On this backdrop, IC Insights reduction of its IoT forecast comes a surprise. , the specialized research institute  has trimmed back its semiconductor forecast for Internet of Things system functions over the next four years by about $1.9 billion, mostly because of lower sales projections for connected cities applications (such as smart electric meters and infrastructure).  Total IoT semiconductor sales are still expected to rise 19% in 2016 to $18.4 billion, as shown in Figure 1, but the updated forecast first presented in the Update to the 2016 IC Market Drivers Report reduces the market’s compound annual growth rate between 2014 and 2019 to 19.9% compared to the original CAGR of 21.1%.  Semiconductor sales for IoT system functions are now expected to reach $29.6 billion in 2019 versus the previous projection of $31.1 billion in the final year of the forecast.

The most significant changes in the new outlook are that semiconductor revenues for connected cities applications are projected to grow by a CAGR of 12.9% between 2014 and 2019 (down from 15.5% in the original forecast) while the connected vehicles segment is expected to rise by a CAGR of 36.7% (up from 31.2% in the previous projection). IoT semiconductor sales for connected cities are now forecast to reach $15.7 billion in 2019 while the chip market for connected vehicle functions is expected to be $1.7 billion in 2019, up from the previous forecast of $1.4 billion.For 2016, revenues of IoT semiconductors used in connected cities applications are expected to rise 15% to about $11.4 billion while the connected vehicle category is projected to climb 66% to $787 million this year.

Sales of IoT semiconductors for wearable systems have also increased slightly in the forecast period compared to the original projection.  Sales of semiconductors for wearable IoT systems are now expected to grow 22% to about $2.2 billion in 2016 after surging 421% in 2015 to nearly $1.8 billion following Apple’s entry into the smartwatch market in 2Q15.  The semiconductor market for wearable IoT applications is expected to be nearly $3.9 billion in 2019. Meanwhile, the forecast for IoT semiconductors in connected homes and the Industrial Internet categories remains unchanged.  The connected homes segment is still expected to grow 26% in 2016 to about $545 million, and the Industrial Internet chip market is forecast to increase 22% to nearly $3.5 billion.  The semiconductor forecast for IoT connections in the Industrial Internet is still expected to grow by a CAGR of 25.7% to nearly $7.3 billion in 2019 from $2.3 billion in 2014.

Share via Whatsapp

Posted in: News , Semiconductors