MADISON, Wis. — Although the electronics industry has hardly completed the hype cycle for the Internet of Things (IoT), it’s beginning to face reality. IC Insights, for one significant example, just released an updated IoT semiconductor market report in which it has trimmed back its own forecast.
IC Insights reduced the IoT semiconductor market’s projected compound annual growth rate (CAGR) — between 2014 and 2019 — from an original projection of 21.1 percent to 19.9 percent.
Hence, semiconductor sales for IoT system functions in 2019 are now expected to reach $29.6 billion in 2019, instead of $31.1 billion, according to IC Insights.
The market research firm’s slimmed IoT market forecast was triggered by lower sales projections for connected cities applications, said IC Insights. The connected cities segment, as IC Insights defines it, include smart electric meters and infrastructure.
The new outlook shows that semiconductor revenues for connected cities applications are projected to grow by a CAGR of 12.9% between 2014 and 2019, down from 15.5% in the original forecast.
Rob Lineback, senior market research analyst at IC Insights, said, “The connected cities category is large because it was backed by economic stimulus efforts earlier this decade in Europe, China, U.S., etc.” However, he added, “It’s growing slower than other segments, partly because of belt tightening by governments that had funded and provided incentives and the maturing of the smart meter segment.”
IC Insights breaks down the IoT market in five segments: connected cities, connected vehicles, wearable systems, connected homes and industrial Internet.
Asked how IC Insights defines IoT semiconductor content inside systems, Lineback said, “We count everything in a system that’s essential to connectivity to Internet.” He said, “Obviously, it is sometimes a bit of judgement call, but what’s essential is the connection part.”
IC Insights sometimes include sensors [in the IoT semiconductor mix] if sensors are served by cloud computing. “We count them in IoT semiconductors because if a system isn’t connected to the Internet, those sensors wouldn’t be there.”
Lineback, however, noted, “We do not consider smartphones as IoT devices.” Nor, in his book, is Smart TV.
Notable in the IC Insights’ analysis is that while lowering the CAGR forecast for connected cities, the firm is bullish on connected vehicles. It raised its car CAGR from 31.2% to 36.7%.
Wearable semiconductor sales are projected to rise by a CAGR of 62.2% between 2014 and 2019. Lineback attributed the big increase to the Apple Watch launch in the second quarter of 2015. Between 2015 and 2019, the CAGR is 16.6%, reaching $3.9 billion in wearable semiconductor sales, he noted.
Connected-home IoT semiconductor sales are forecast to grow by a CAGR of 24.2% between 2014 and 2019 to $1.0 billion in the final year of the forecast.
Meanwhile, the Industrial Internet chip market is forecast to increase 22% to nearly $3.5 billion in 2016. Between 2014 and 2019, the Industrial Internet segment is still expected to grow by a CAGR of 25.7% to nearly $7.3 billion in 2019.
— Junko Yoshida, Chief International Correspondent, EE Times 
