IoT is driving an analog opportunity

IoT is driving an analog opportunity

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Blaine Bateman tries to quantify the analog opportunity being driven by the Internet of Things revolution.
By eeNews Europe

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I’ve written before about the impact the Internet of Things (IoT) will have on electronics sales including the special role played by analog devices in IoT. Most recently, in my Planet Analog blog entitled Digitizing Analog Sensor Data for the IoT, I argued that because of all the sensors, integrated packages including analog front ends for sensor signal conditioning are likely to see growth. Here I want to take some of the numbers out there and bracket what the opportunity might be.

Last year IC Insights noted that global unit shipments of semiconductors could exceed one trillion devices in 2016. They also said in a mid-year update that Analog IC shipments were outstripping all other categories in terms of growth, forecasting nearly 9 percent CAGR (Compound Annual Growth Rate) for Analog IC sales from 2013 to 2018. Market data firm IHS said in March that all Industrial semiconductors, of which Analog is the largest category, would grow by nearly 10 percent a year to over $55 billion annually by 2018. Separately, IHS reported total semiconductor sales in 2014 were $355 billion; these figures put Industrial ICs at about 12 percent of total semiconductors. I think that all Analog IC sales are as much as 16 percent of all semiconductor sales. Using these figures my rough estimate is that Analog could be between $46 billion and $62 billion in 2015 growing at a 9 to 10 percent rate. For the sake of analysis, let me assume ASP (average selling price) of $0.50, and conclude that analog IC unit shipments will be around 100 billion units in 2015.

Ron Exler, senior strategist with Saugatuck Technology, a Connecticut-based subscription research and strategy consulting service, said in a recent post: “The Industrial Internet is a term coined by General Electric. It involves the massive systems that make up society’s infrastructure. These systems include energy generation and distribution, transportation management, healthcare diagnostics, and manufacturing monitoring. Industrial Internet is the IoT applied to industrial applications with analytics to provide context-aware intelligence.”

Next: In another post


In another post proving some of the latest findings, Exler notes: “It’s exciting and innovative. Yet IoT also has unrelenting concerns of security, connectivity, data processing, analysis, and manageability.” Referring to Figure 1, the Saugatuck article points out that Industrial IoT is likely to be on internal networks versus the public Internet. The figure summarizes Saugatuck’s findings that 55 percent of companies plan to address infrastructure to manage IoT in the next 3 years. The implication I draw from all of this is that a bubble of Industrial IoT spending is going to occur, or, looking at it the other way, a bubble of opportunity will occur for analog semiconductor companies.

Figure 1: Saugatuck Technology findings from their Infrastructure Survey. The last category is IoT Management which would include most industrial applications, since they may not be exposed on the public internet, but connected to private infrastructure. Figure and content Copyright, Saugatuck Technology, used with permission.

Next: What Cisco says

 

 


Coming at this another way, Cisco estimates the Internet of Everything (IoE) had 10 billion connections in 2013, and will have 50 billion connections in 2020. Cisco’s growth curve lines up with the bubble of opportunity over the next 3 years; you can see that by around 2018 things will be leveling off.

Figure 2: Cisco estimates connections for IoE to grow from 10B in 2013 to 50B in 2020. Figure from Cisco’s IoE Internet of Everything (IoE) whitepaper.

Using Cisco’s growth predictions, I estimate there are about 11 billion connections in 2015, growing to 30 billion in 2018. That is adding 19 billion connections from 2016 to 2018. If I conservatively consider an IoE node to have at least one analog IC for the wireless section, one for power, and one for the sensor, the 19 billion connections represent 57 billion analog IC opportunity. Going back to the market data, using a growth rate for Analog IC shipment value of 9.5 percent per year, there will be roughly 330 billion analog ICs shipped over these same three years. In other words, the IoT (or IoE if you prefer) could represent over 15 percent of analog IC unit demand from 2015 to 2018.

So there you have it. The Internet of Things could well a harbinger of a new golden age of analog. These applications will definitely drive IC sales related to RF, power/energy harvesting, and signal conditioning, including A to D converters and others.

Blaine Bateman is president of EAF LLC, a consultancy in strategy, market analysis, technology due diligence, and related areas. Prior to forming EAF, Blaine held a series of senior executive positions with Laird Technologies. He has experience in electronics, automotive, wireless, instruments, and cryogenics. Over his career, he has received 18 patents in chemical instruments, antennas, and RF design.

This article first appeared on EE Times’ Planet Analog website.

 

 

 

Related links and articles:

 

Cisco’s Internet of Everything (IoE) whitepaper

www.saugatechtechnology.com

www.icinsights.com

www.ihs.com

News articles:

Digitizing analog sensor data for the IoT

Use distributed computing to warm the world

Wireless IoT Forum aims to counter fragmentation

Rebranding the revolution: the future of IoT is embedded

Yole predicts IC price pressure in IoT roadmap

 

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