Bangkok--21 Aug--PwC Thailand
In our rapidly evolving digital era, everything that can be connected to the Internet will be connected to the Internet, the PwC study The Internet of Things: The next growth engine for the semiconductor industry shows.
Internet of Things (IoT) and wearables devices are changing how people live and forcing companies to transform to adapt to them.
“IoT and wearable devices are playing a crucial role in driving worldwide business growth,” Vilaiporn Taweelappontong, a partner at PwC Consulting (Thailand). “They offer an unmissable opportunity to increase profits and stay ahead of the competition.”
“The rise of connectivity and smart devices will drive tremendous 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 they focus on providing sensors to keep us connected. Globally, semiconductor industry billings will increase to US$432 billion by 2019 at a 5.2% compound growth rate, according to the study.
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.
Global sales of sensors and actuators is expected to reach US$14 billion by 2019 at a 10.4% CAGR.
Electric and hybrid cars help semiconductor growth
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% annual growth rate by 2019.
“While conventional cars are still the most important driver for automotive semiconductor sales, we expect to see more OEMs taking a digital approach to their vehicles with auto electronics such as carputers, telematics and vehicle intelligence.”
By 2019, China is expected to remain the global leader in the automotive segment and achieve an 11.2% growth rate. Indian domestic light vehicle sales experienced a 2% decline of from 2013 to 2014, but sales made a slight 1.5% recovery this year.
However, beyond the BRICs, 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 (+9% YoY) from 2.15 million. According to FTI data, Thailand’s car production fell 5.5% from a year earlier to 151,698 units in June, while year-to-date production slid 1.8% 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.
Wearable devices – the new business agenda
Over the last few years, wearable devices have played a key role in changing consumer behaviour. Consumers are enjoying the lifestyle benefits wearables afford.
They’re contributing to quality of life choices, whether they’re human to computer interfaces, such as smart glasses, watches, or head-mounted displays, or health care monitoring devices.
Semiconductor industry revenue from wearable devices are expected to grow from US$15 million in 2013 to more than US$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.
“Not only do they need to understand all the aspects of new technologies to design products that take advantage of market demand, but privacy and security are also big issues that need to be addressed in order to win customer trust.”