The industrial market continues to be a sweet spot for the electronics supply chain. Unlike the volatile consumer market, industrial products tend to have a longer design cycle and a longer lifespan. Still, according to Semico, the industrial sector represents only a small portion of semiconductor sales.
According to SIA/WSTS data, semiconductor sales to the industrial market comprise only 12 percent of total semiconductor revenues. In addition, the industrial sector traditionally grows at a comparably slow, steady rate. From 2010 to 2015, the industrial sector experienced a 4.8 percent CAGR from $31.9 billion to $40.3 billion.
If you connect the industrial sector with the Internet of Things (IIoT), however, things get more interesting. Semiconductor sales to the IIoT, Semico estimates, will grow at a 7.7 percent CAGR during the next five years. Two product categories which will lead the growth are sensors and actuators as well as micro logic.
The IIoT is a component of the what futurists are calling the Fourth Industrial Revolution, which promises to stimulate a transformation in the way industry, business and local communities operate. Semico, in its report Industrial IoT: Smart Factories and Cities, sees niche market growth potential for IoT in industrial. IIoT can demonstrate ROI which will help to drive adoption of the productivity and operational enhancements that IIoT can provide.
Semico Research segments the industrial IoT into two distinct markets: smart manufacturing and infrastructure.
The smart manufacturing segment includes advanced process control, manufacturing process monitoring, supply chain management, ERP, and MRP. These are all part of a sophisticated monitoring, data collection and evaluation process that have been used in manufacturing and industrial applications for decades. IoT adds another layer to the current systems, Semico said. A portion of this market has a significant amount of hardware already in place. The first stage of IIoT implementation will be driven by a software layer to keep new investment costs down. However, there must be some investment in wireless and sensor technology with additional investment expected in the future.
The key ingredient for IIoT smart manufacturing differentiation is an integration layer which combines management services with the hardware that provides a more robust monitoring and response system, as well as more efficient use of existing plant operations. In addition to highly responsive feedback loops which improve the plant operations, data collection, and analysis, IIoT is expected to be more efficient, faster and more accurate.
Infrastructure is usually associated with public community projects but also includes building systems. Some of the more obvious areas of impact, according to Semico, are expected to be in the public infrastructure services such as public lighting. The major segments are listed below:
- Public Lighting
- Street lighting
- Traffic lighting
- Public Services
- Utility usage and delivery including water, electricity and gas
- Waste management (garbage pick-up)
- Building Systems
- Energy systems including HVAC
- Lighting systems
- Network infrastructure including wireless
Semico expects IIoT to experience the most growth in those applications that exhibit some of the following characteristics:
- Where current monitoring is not adequate or would highly benefit from a 24/7 monitoring system.
- Where the environment to be controlled is large in area or in the number of monitoring stations.
- Where the critical success of the process depends on accurately monitoring several variables over time.
- Where the environment is hazardous and where it would be better not to have human contact.
- Where it is beneficial to reduce the amount of time workers spend in a hostile environment.
- Where there is an incentive to reduce maintenance and operational costs.