Smith Market Blog

Why Green is Smart: Safe harbors and growth areas for semi


As demand issues continue to weigh on forecasts for the mature markets on both sides of the Atlantic, we continue to look for where growth is happening and what sectors will be providing some safe harbors.  Outside of the tablet and smartphone (smart wireless device (SWD)) sector, it may seem like there is little respite from the global market volatility for the mature market economies.  Certainly it is somewhat hard to find many hot sectors, whether for components or devices, outside of a few choice value chain partners to the leading SWD OEMs.

Green technology is, however, continuing to prove itself as an important and forward moving sector for semi.  Demand is coming from a wide array of needs for consumers and enterprises alike.  The need for solutions spans the range from power management solutions for devices based on new chip designs, improvements for the full range of battery and energy storage for handheld devices to automobiles and larger electrical power sources, and on to the energy production value chain (from utility level to residential solar energy production).

What this all means is that the green value chain is presently focusing R&D on the improvement of technology that can advance the energy efficiency and energy storage/management issues needed in today's highly electricity-dependent world.  Regardless of whether for business or consumer sectors, the fact that electricity is inherently in demand and falling short of meeting demand, particularly as people demand devices that can be 'always on, always connected' and then use those devices in always climate controlled and electrically connected wifi environments.

While there is quite a stretch to go before we see a meaningful global increase in renewable energy sources, energy efficiency has taken hold as a top feature in component design and bill of materials for the latest products, across market sectors (see this recent report on energy efficiency and sustainability practices).  Furthermore, the mature economies, facing significant economic worries, resoundingly see and financially support the improvement of smart meters, demand management for electricity generation and use, as well as the increase in installed renewable energy sources.

One can no longer review the semiconductor and electronic industry headlines on any given day without having green technology news at the fore of the sectors being covered.  Corporations are increasing their respective 'green footprints' just as consumers are increasing their demand for environmentally friendly reverse logistics options for electronics (see, for example, our recent MarketWatch Quarterly report here on the latest impacts on the green tech supply chain).

Increased financial support for new and expanded green power production by the mature economies has the attention of the solar photovoltaic, wind and biomass markets presently; just as numerous system on chip (SoC) solutions for managing heat and power on chips has the attention of designers in order for components and devices to consume less electricity/power (see this recent report by IEEE on smart grid developments in the US).  One example of the profitability potential in renewable energy is found this week in an otherwise challenging market, wind.  This week, Vestas reported 1H11 earnings higher than expected and beating out revenue on a year-over-year basis for the first half of 2011 (see this report from the Danish press here, and the WSJ version in English here). Meanwhile, there continues to be some trouble within the solar market, but the broader market forecast is not as cloudy as the present growing pain stages of this younger, booming market appears (see this report from ElectroIQ on global solar installation increases). 

The reasons for strong growth forecasts in green energy and energy efficiency solutions are simple.  The end goal, globally, is the same: increase the power management of devices both to reduce demand.  For semi, these feature demands are well within our problem solving forte.  The financial support for renewables and energy efficiency/demand management is being seen not just from mature economies such as the US and the EU, but also from BRIC and other emerging economies, that are facing energy demand problems as their economies grow quickly.  The result of this focus on green energy means solid growth for semi is certain both for the present and for the future.

Smith is dedicated in practice as an enterprise and as a quality value chain partner, to providing solutions that positively contribute to green technology (see our Environmental Policy here, and our Cycle IT asset disposition solutions here).  This year we are providing an ongoing series on Green Technology as it impacts the semiconductor and electronics industries, and as we contribute to this market growth.

Lisa Ann Cairns, Ph.D.
Written on Thursday, 18 August 2011 01:27 by Lisa Ann Cairns, Ph.D.

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