The total production value of electronic systems is expected to increase five percent in 2014, reaching $1.49 trillion, according to IC Insights’ new 2015 IC Market Drivers report. The report finds that cellphone handsets have extended their lead over the PC segment, including desktop and notebook computers, as the largest electronic systems market in 2014. The cellphone segment overtook PCs, which dominated IC sales for most of the last two decades, in 2013.
Similarly, Gartner Inc. remains bullish on 2014 forecasts for unit production of smartphones and ultramobiles, which the research firm expects to increase 27.0 percent and 18.9 percent, respectively. Gartner forecasts worldwide semiconductor revenue to reach $338 billion in 2014, up 7.2 percent compared to 2013.
"Semiconductor revenue set an all-time record in the third quarter of 2014, fueled by a strong electronics build for the holiday season," said Jon Erensen, research director of Gartner, in a press release. "Get ready for a flood of new product introductions, ranging from simple low-cost tablets to high-end ultramobiles and smartphones. Demand for the iPhone 6 and iPhone 6 Plus has been robust, but there is concern for other types of devices planned for the holidays."
Despite the bullish forecasts, the growth rate of global smartphone shipments slowed to 25.9 percent in 2014 and is expected to fall to 12.4 percent in 2015, according to TrendForce. The market research firm estimates that nearly 1.17 billion smartphones shipped in 2014 and expects about 1.31 billion to ship next year.
"The growth rate of smartphone shipments is decreasing because the penetration rate is already very high while the market is saturated," said Avril Wu, a handset analyst at TrendForce, in a press release. She believes Chinese brands remain the driving force in the global smartphone market, and will comprise 17 percent of global handset shipments in 2015.
However, the Internet of Things (IoT) and wireless networks market segments are expected to grow the fastest through 2018. IC Insights reports that systems sales related to IoT is expected to rise by the fastest rate over the forecast period of 2013 to 2018, growing at a CAGR of 21.1 percent.
Here are IC Insights’ overall market segment stats:
- Cellphone handsets are forecast to account for 18 percent of worldwide electronic systems sales at $265.2 billion, compared to slightly less than 18 percent in 2013
- PC sales are expected to account for 13 percent of worldwide electronic systems sales at $196.0 billion, compared to 15 percent in 2013
- Tablet sales are expected to account for six percent of 2014 systems sales, compared to five percent in 2013
- IoT functions (embedded in end-use applications) are projected to account for three percent of the total electronics market, up slightly from 2013.
The report, IC Market Drivers—A Study of Emerging and Major End-Use Applications Fueling Demand for Integrated Circuits, also forecasts cellphone IC sales to grow 11 percent in 2014 to $70.7 billion from $63.5 billion in 2013. Analysts also project cellphone IC sales to rise another 11 percent to $78.4 billion in 2015, while standard PC IC sales will end a two-year slump (-11% in 2012 and -10% in 2013) to grow four percent in 2014, reaching $59.1 billion. PC IC sales are forecast to grow two percent in 2015, reaching $60.6 billion.
The cellphone market accounted for 25 percent of total IC sales in 2014 versus standard PCs (desktops and notebooks), which accounted for 21 percent of total IC sales, said IC Insights.
Among the 11 end-use market segments (shown in the chart above) IC sales growth is expected to be the strongest in subsystems for IoT (CAGR of 22.3 percent), wireless networks (19.7 percent), and tablet computers (17.4 percent) over the five-year forecast period. IC revenues generated by these 11 end-use systems categories represent 76 percent of total IC sales worldwide in 2014 and are forecast to account for 85 percent in 2018.
The total production value of electronic systems is forecast to reach $1.82 trillion in 2018, up from $1.41 trillion in 2013, which represents a compound annual growth rate (CAGR) of 5.2 percent, according to IC Insights.