Wearables boom reflects rise in demand for semiconductors

 Internet of Things and wearable devices are new growth drivers for the semiconductor industry as the demand for sensors increases.

The global semiconductor industry is expected to increase to US$432 billion (Bt15.44 trillion) by 2019 at a 5.2 per cent compound growth rate, according to the PwC study “Internet of Things: The next growth engine for the semiconductor industry study”.

Meanwhile, global sales of sensors and actuators are expected to reach $14 billion by 2019 at a 10.4 per cent CAGR. 

[The Internet of Things (IoT) is a scenario in which objects, animals or people are provided with the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction.]

Vilaiporn Taweelappontong, a partner at PwC Consulting (Thailand) said that Internet of Things (IoT) and wearable devices are changing how people live and forcing companies to transform to adapt to them. Also, IoT and wearable devices are playing a crucial role in driving worldwide business growth.

“The rise of connectivity and smart devices will drive demand for sensors as people and business stay connected and exchange information. Companies that have an innovative IoT strategy and well-executed plans would see success,” she said.

The semiconductor industry is an enabler in this growth as it focuses on providing sensors to keep people connected.

Connected devices from consumer-oriented technologies such as smartphones, tablets, cars and wearables, to industrial machinery, commercial jet engines and oil-drilling rigs rely on data-collecting components, making sensors one of the biggest growth drivers for the semiconductor industry. 

Electric and hybrid car demand is also growing, which is another driver for the semiconductor industry. Semiconductor content in electric cars and hybrids is 1.5 to 3 times higher than in conventional cars. The semiconductor content sales in the electric and hybrid automotive market is expected to reach a 20.5 per cent annual growth rate by 2019. 

By 2019, China is expected to remain the global leader in the automotive segment and achieve an 11.2 per cent growth rate. Indian domestic light vehicle sales experienced a 2 per cent decline from 2013 to 2014, but sales made a slight 1.5 per cent recovery this year. 

However, beyond the BRICs (Brazil, Russia, India, China and South Africa), potential markets are emerging including Mexico, Poland, Indonesia, Turkey and Thailand. 

The Federation of Thai Industries’ Automotive Industry Club trimmed its 2015 total auto production target to 2.05 million units, over 9 per cent growth from 2.15 million. 

According to FTI data, Thailand’s car production fell 5.5 per cent from a year earlier to 151,698 units in June, while year-to-date production slid 1.8 per cent to 935,251 units.

Even so, Southeast Asia’s second-largest economy remains among the most important automotive hubs of the region. The country is a regional vehicle production and export base for some of the world’s top carmakers.

Meanwhile, wearable devices are also the new business agenda that have played a key role in changing consumer behaviour. Consumers are enjoying the lifestyle benefits wearables make affordable. Semiconductor industry revenue from wearable devices is expected to grow from $15 million in 2013 to more than $7 billion in 2019, the report shows.

“One of the biggest concerns for businesses is how to evolve and adapt to consumers’ rapid behaviour changes in response to technology advances,” Vilaiporn said.