The rise of the IoT semiconductor
In short
The penetration of semiconductor components classified as IoT is expected to grow from 7% in 2019 to 12% by 2025.
Four key components are driving this IoT semiconductor growth: MCUs, connectivity chipsets, AI chipsets, and security chipsets and modules.
Why it matters?
The increasing penetration of IoT semiconductors will necessitate chipmakers to put an enhanced focus on typical IoT requirements (e.g., ultra-low power, smaller form factor, built-in security)
Device makers should see a flurry of new chips specifically designed explicitly with IoT in mind.
Semiconductors – a strongly outperforming technology sector
The Philadelphia Semiconductor Index , which tracks the value of the 30 largest semiconductor firms globally, increased by a factor of 5x in the last five years (from $80 in Jan 2016 to $416 in Jan 2021). The index not only handily beat the high-flying Nasdaq index (which increased by a factor of 2.8 in the same timeframe) but also other technology indices, such as cloud computing (e.g., the SKYY Index increased 3.5x in the same timeframe).
This staggering performance of value in semiconductor firms can be attributed to many factors. Most notably, the industry has profited from the need for more and higher-value semiconductor components for several newly emerging technologies. Key drivers include big data analytics, mobile communication, gaming, connected and semi-autonomous cars, and to a large degree, the fast growth of connected Internet of Things (IoT) devices.
According to our estimates , the number of active IoT device connections grew from 3.6 billion in 2015 to 11.7 billion in 2020. By the end of 2025, we forecast a total of 30 billion IoT connections. The rise of the IoT semiconductor market is broad and touches most industry segments, including industrial, automotive, energy and utilities, and healthcare. Consumer IoT devices such as smartwatches and smaller wireless accessories have seen a particularly high demand in recent years, which has prompted several companies that were not making IoT devices a few years ago to move into the IoT ecosystem (e.g., many of the smartphone makers).
The current IoT device explosion will continue to drive the IoT semiconductor market and will likely lead to further semiconductor innovations amid higher production volumes. IoT Analytics latest report on this topic forecasts the IoT semiconductor component market to grow at a CAGR of 19% from $33B in 2020 to $80B in 2025. In particular, four components will be in the spotlight: IoT microcontrollers (MCUs), IoT connectivity chipsets, IoT AI chipsets, and IoT security chipsets and modules.
Four key components driving IoT Semiconductors
IoT Analytics defines IoT semiconductors as those semiconductor components that either individually or collaboratively contribute to the functionality of an IoT...
