Despite the forecast for billions of connected things in 2016, market research firm IC Insights has slightly lowered its semiconductor sales growth forecast for Internet of Things (IoT) applications due to lower sales projections for certain market segments. IoT semiconductor sales is still expected to grow 19 percent in 2016, reaching $18.4 billion. However, the compound annual growth rate (CAGR) over the forecast period of 2014 to 2019 has been lowered to 19.9 percent from 21.1 percent.
The semiconductor forecast for IoT was cut by about $1.9 billion over the next four years, primarily due to lower sales projections for connected cities, including smart electric meters and infrastructure, according to IC Insights. Semiconductor sales for IoT system functions are forecast to reach $29.6 billion in 2019, compared to the previous projection of $31.1 billion.
The biggest change cited in the updated 2016 IC Market Drivers Report is the outlook for semiconductor sales for connected cities applications, sliding from the original forecast of 15.5 percent CAGR to 12.9 percent CAGR over the forecast period. In 2016, revenues of IoT semiconductors used in connected cities applications is forecast to rise 15 percent to about $11.4 billion and reach $15.7 billion in 2019.
“The forecast for IoT semiconductors in connected homes and the industrial Internet categories remains unchanged,” said IC Insights. Semiconductor sales for connected homes is still expected to grow 26 percent in 2016 to about $545 million, and the industrial Internet chip market is forecast to increase 22 percent to nearly $3.5 billion. The semiconductor forecast for IoT connections in the industrial Internet is forecast to grow by a CAGR of 25.7 percent to nearly $7.3 billion in 2019 from $2.3 billion in 2014.
On a brighter note, semiconductor sales for connected vehicles is forecast to rise by a CAGR of 36.7 percent, up from 31.2 percent in the previous IC Insights projection. This translates into $1.7 billion in sales in 2019, up from the previous forecast of $1.4 billion. In 2016, the connected vehicle segment is expected to grow by 66 percent, reaching $787 million.
Sales of IoT semiconductors for wearable systems also increased and is forecast to grow 22 percent to about $2.2 billion in 2016 after spiking 421 percent in 2015 to nearly $1.8 billion following Apple’s entry into the smartwatch market in the second quarter of 2015, according to IC Insights. The semiconductor market for wearable IoT applications is expected to be nearly $3.9 billion in 2019.