The Semiconductor Industry serves as a driver, enabler and indicator of technological progress. As environmental issues have become more of a concern today, semiconductor devices are being made to reduce power consumption, reduce heat dissipation, capture solar energy, create more efficient lighting solutions and so forth.
Manufacturing operations have shifted to Asia over the past decade, but since innovation remains largely within the country, the sector is one of the biggest employers of labor, with a corresponding significant impact on the overall economy.
The consumer and computing markets consume two-thirds of all semiconductors, which are increasing convergence between these two markets such that it is getting more difficult to identify which devices are computing and which consumer.
PC market growth will be moderate in the next few years, more than made up by growth in mobile devices. Semiconductors for mobile devices have their own set of unique challenges: greater functionality and better experience at higher speeds and consuming less power. They also have to be priced lower. Additionally, a lot of the growth in the next few years will come from price-sensitive emerging markets, which is likely to pressure margins for players.
Spending on consumer electronics is not expected to be more than 2.0% this year (previous forecast of 2.4% was adjusted due to better-than-expected 2013 growth) and 1.2% in 2015. Unsurprisingly, emerging product categories like 3D printers, health and fitness devices, smart watches, Ultra HD television displays and smart thermostats will see the strongest growth (242%), albeit off a small base. Smartphone revenue (the single largest driver of CE sales) will grow 7% while tablets will see a 3% decline, according to the CEA.
The move to cloud computing and growing data consumption on mobile devices is leading to strong demand for suitable wireless and computing networks. This is currently one of the most important semiconductor markets. Industrial automation, automotive, aerospace and defense are also consuming a growing number of semiconductors, but auto is currently expected to be the strongest of these driven by infotainment and safety.
The next growth wave will undoubtedly come from the Internet of Things, a market that IDC expects to grow at a CAGR of 7.9% through 2020. Semiconductors will play an important role enabling this transition, leading to tremendous growth in the segment.
Forecast for 2014
According to World Semiconductor Trade Statistics (WSTS) data, there should be positive worldwide semiconductor sales growth of 6.5% in 2014 (previous 4.1%), followed by 3.3% growth in 2015 (previous 3.4%). Asia, Europe and the Americas will grow 9.3%, 7.9% and 2.1%, respectively. Japan is will be down 1.3%. The SIA didn’t provide an end-market wise update. It previously expected growth across markets in both years, although wireless and automotive were expected to grow the strongest with consumer and computing staying relatively stable.