Market Insight

Executive Summary - Semiconductors in the IoT

October 10, 2017

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  • IHS Markit forecasts that the overall market for semiconductors used in IoT applications will grow from 32.4 billion units shipped in 2016 to 74.1 billion units in 2025—a compound annual growth rate (CAGR) of 9.6%.
  • Examining the growth in IoT semiconductor revenue, IHS Markit forecasts that it will grow from $94 billion USD in 2016 to $172.8 billion in 2025—a CAGR of 7%.

Semiconductors are the backbone of the electronics marketplace. Heavily influencing the future of the Internet of Things (IoT), innovations in semiconductor technology impact multiple market verticals and have a direct effect on everything from how families communicate to the strategic market decisions companies make and global economic growth. In this three-part series we examine the market for the semiconductor categories most commonly associated with IoT applications – connectivity, sensors, and processors. Each of these categories plays a critical role in typical IoT solutions which follow the IoT paradigm of Connect, Collect, and Compute.

Our full report examines the current state of the semiconductor market in the IoT as well as its future impact on seven primary sectors:

  • Automotive
  • Communication
  • Computer
  • Consumer
  • Industrial
  • Medical
  • Military and aerospace

Within each vertical market sector, each volume report explores a key semiconductor type including connectivity ICs, sensors, and processors used in IoT devices. Further, this report breaks each semiconductor type into respective categories that enable a full understanding of how these component technologies drive market trends and impact the IoT on a global scale.

Semiconductor Trends by Type

Connectivity ICs will remain dominated and heavily influenced by the mobile handset market:

  • 77% of connectivity ICs are shipped into the computing market segment for portable computing applications.
  • IHS Markit estimates 4.97 billion connectivity ICs were shipped into applications in the communication segment in 2016. Of these, 3.8 billion were in mobile handset applications.
  • WPAN Solutions: IHS Markit forecasts 2.4 billion Bluetooth Classic and Smart Ready devices will ship in 2020, as the development of Bluetooth Smart in the IoT ecosystem has become increasingly important, acting as a hub to connect and control Bluetooth Smart devices primarily in the automotive, mobile handset, desktop computing, portable computing, consumer, and PC peripherals.
  • WWAN Solutions: 2.3 billion of the projected 2.6 billion ICs shipped using WWAN solutions are forecast to be in cellular handsets, which are essentially the controller device in many IoT ecosystems.
  • WLAN Solutions: IHS Markit estimates that 3.1 billion ICs using 802.11 were shipped into IoT applications in 2016, and this number is forecast to increase to 3.7 billion in 2021.
  • Mesh Solutions: A large number of mesh technologies are forecast to be used for IoT connectivity solutions, as in most cases they have been designed to address the low-power, low-bandwidth nature of IoT node requirements.

Processor performance continues to improve:

  • Communications represents the largest revenue growth opportunity and is a highly competitive market for IoT-related hardware and services. This market is expected to grow from $12.6 billion in 2015 to just over $39 billion in 2025—a 12.0% CAGR.
  • Connectivity stacks for nodes continue to work within narrower constraints, lowering the processing requirements over those of previously generic host controller connectivity stacks.
  • The integration of security, performance features, and integrated PHYs are helping to bolster the prices of connectivity solutions while continuing to lower BOM cost through integration.

Sensor adoption will be significantly driven by the IoT:

  • The consumer segment is one of the most interesting for IoT sensors, with the emergence of smart homes, wearables, and smart appliances driving adoption.
  • Mobile Technology: sensor trends in mobile phones are dominated by advances in accelerometers, microphones, and fingerprint authentication.
  • Smart Grid: Smart meter sensors are increasingly common as utilities are looking to monitor consumer utility usage in a more cost-effective manner, such as automated monitoring through radio transmission of data.
  • Drones and Robotics: IoT sensors are growing in the professional segment, but not yet in the cost-sensitive consumer segments for drones and robots. The integration of wireless networking technology, particularly Wi-Fi, will drive adoption in the future.
  • Discrete Automation and Process Control: World market unit shipments for silicon sensors directly used in factory automation equipment will rise to almost $100 million in 2020, up from only about $5 million in 2015. 

Key Findings

The reports include in-depth tables and market statistics for semiconductors in terms of units and revenue. Forecasts are provided with segmentation for semiconductor type, sub-type, and market segment. Year-over-year growth rates are provided as well as compounded annual growth rates.

For example, Tables 4.1 and 4.2 below show the market for semiconductors used in IoT segmented by major product type in terms of units shipped and revenue, respectively.

Semiconductor in IoT by type - thousands of units

 

Semiconductors in IoT by type - millions of USDFor additional insights and context, please see the full three-part series of reports on semiconductors in the IoT.

Research by Market
Enterprise & IT Semiconductors
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