Internet of Things to Drive Semiconductor Growth

The Internet of things promises to be a boon for many tech vendors; IDC analysts have said revenues tied to the IoT could hit $7.1 trillion by 2020.

Those vendors that sell semiconductor products around processing, communications and sensors will benefit significantly over the next year, due in large part to innovation in the automotive and consumer segments of the IoT, according to Gartner analysts.

In numbers released Nov. 3, Gartner is forecasting the IoT segment of the overall semiconductor market to grow 36.2 percent in 2015; the larger semiconductor space will see growth of 5.7 percent. Processing products—including microcontrollers and embedded processors—will be the largest of the IoT segment, with $7.58 billion next year, while sensors will grow the fastest, at 47.5percent.

“The demand for billions of things will ripple throughout the entire value chain, from software and services to semiconductor devices,” Gartner Research Director Alfonso Velosa said in a statement. “These ‘things’ will drive huge demand for individual chips. IoT semiconductor growth will come from industries spanning consumer, industrial, medical, automotive and others.”

Gartner’s numbers come on the eve of the Internet of Things Expo 2014, which kicks off Nov. 4 in Santa Clara, Calif.

According to the analyst firm, the consumer market will continue to be the biggest driver in the Internet of things through at least 2020, followed by the automotive and industrial spaces.

“Gartner forecasts almost 30 percent growth through 2020 for IoT semiconductor revenue,” Dean Freeman, research vice president at Gartner, said in a statement. “This revenue spans every conceivable industry and is driven by the immense scale of low-cost devices. Some in the industry believe this growth will transform the semiconductor industry. However, further investigation shows that the majority of IoT devices are commodity offerings. The truth is that inexpensive devices are one of the biggest enablers of IoT.”

The IoT is expected to grow rapidly. Cisco Systems officials say that by 2020, there will be at least 50 billion connected devices worldwide. Already there are about 25 billion, they said. In the automotive industry, safety regulations and the demand for more conveniences and more autonomous vehicles are fueling the growth for IoT-based semiconductor products, Gartner analysts said.

LED lighting, wearable devices such as smart glasses and smartwatches, and consumer demand for lifestyle enhancement also will drive semiconductor sales.