Market Insight

Internet of Things (IoT) drumbeat grows louder at SEMICON Southeast Asia 2015

May 07, 2015

Joanne Goh Joanne Goh Analyst, Electric Motor Systems & Capital Equipment

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The Internet of things (IoT) was made the highlight during SEMICON Southeast Asia, because of its high potential in the industrial automation industry. According to the IHS Technology forecast, the growth in IoT is currently driven by the consumer market, which accounts for 35% of the total world market for internet-connectable devices. The semiconductor industry will respond by developing components to serve the large, but price-conscious consumer market. Makers of consumer devices will demand reliable components at even lower prices, to help them to reduce costs, and maintain profit margins in the face of competition.

The semiconductor industry will play the biggest role in the era of IoT; and the evolution of technology will lead to process complexity. For example, through-silicon-via (TSV) technology in image sensor packaging and system-on-chip (SoC) or package-on-package (PoP) fabrication require good process capability.   Yield, productivity and process control are the key drivers of cost reduction. By 2025, IoT in the industrial sector, particularly in industrial automation, is forecast to be half the total market for internet-connectable devices. Close to 87% of industrial connections will remain wired, for reasons of both security and data-transmission efficiency. Many equipment manufacturers and automation companies in Asia have started to expand their IoT roadmaps by integrating nodes into their instruments. This is to enable machine-to-machine (M2M) communication and connection to Fog computing services.

Among all, Taiwan and South Korea will be the most active pioneers of IoT adoption where Industrial internet-connectable devices are forecast to grow at a double-digit annual rate for the next five years.  IoT in Southeast Asia’s industries is projected to bloom in the next five to ten years. Industrial IoT shipments in Vietnam, Indonesia and the Philippines are growing more slowly, at a single-digit annual rate. Although these countries are rich in human resources, their skills and infrastructure are inadequate. However, in Malaysia, the Multimedia Development Corporation (MDeC), a government-owned institution and MIMOS, Malaysia’s national research and development centre are working closely with the government in facilitating the development of IoT, as they strive towards a developed economy by 2020. Intel has spearheaded in the data mining and analytics pilot projects in various industries and has demonstrated great benefit from IoT implementation. These pilot projects include wireless monitoring of water level in paddy field, Intel manufacturing plant by integrating IoT with factory automation, smart parking system to capture the available spaces and store into cloud system.

The technology roadmaps and pilot projects reflect the potential for growth of IoT in the industrial sector. In terms of industrial IoT, semiconductor manufacturing will lead the evolution, followed by agricultural industries and the factory automation in automotive, medical, and food and beverage industries in Southeast Asia. The development of IoT will lead to more company acquisitions and enterprise mergers for capital expenditure (CAPEX) expansion, technology sharing and talent retention for future technology development. Once the growth inhibitors of infrastructure, skillset, security and privacy are addressed, the development of IoT in industrial automation will be another green field for government and investors to enter.

Organization
Intel
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