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Spending Increases and IoT Benefit Semi


With the holiday season quickly approaching, competition has certainly increased among OEMs for the latest device design and functionality. Of course, regardless of the supply offerings to choose from, the question that lingers for everyone is will consumer interest and confidence in spending be there?


Tech confidence returns

Initial data just released from the Consumer Electronics Association (CEA), as reported by Electronic Products & Technology, show that confidence in technology spending has "jumped to the highest level for the month of October since 2007, while sentiment toward the overall economy increased two points in October […]." This latest data on sales data for the semiconductor and electronics industry bodes well for a positive close to 2013 and start to 2014.

Additional data supporting positive economic conditions for our industry can also be found in the Semiconductor Industry Association (SIA) data released in early October, showing a six-month consecutive rise in sales of semiconductors, with particular strength from North America:

[…] worldwide sales of semiconductors reached $25.87 billion for the month of August 2013, an increase of 6.4 percent compared to August 2012, marking the industry’s largest year-over-year growth since March 2011. Sales in the Americas increased by 23.3 percent compared to August 2012, while global sales in August were 1.3 percent higher than the previous month’s total of $25.53 billion. All monthly sales numbers are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average. 

Will recent past ensure near future growth?

While that is an impossible question to answer with certitude, the above are but two of the set of rather solid data from industry and financial analysts supporting continued positive growth for semiconductor and electronics. Not only are we looking at increased diversification of growth as health & fitness, automotive, consumer electronics (CE), and industrial electronics continue to gain, there are also green shoots and continued hope for enterprise refresh cycles (eventually they have to happen, right?). As IHS iSuppli proposes regarding the enterpirse refresh question:

An indirect boost could come by way of the desktop PC space, which is expected to liven up as the Microsoft Windows XP operating system expires in April next year and the commercial segment then undergoes an anticipated refresh cycle. Such a development could potentially translate into millions of computers upgrading to a fresh operating system as well as more advanced hardware. Any uptick in the desktop space is potentially beneficial to the mobile market, especially if excitement over new software and hardware spills over and engages consumers.

Beyond the sector growth is the larger growth momentum from the Internet of Things (IoT) which continues to propel adoption and educate consumers about "the Smart Life," or ubiquitous computing advantages. An important industry growth benefit comes, naturally, from the continued uptick in IoT adoption and increase as more devices are made "smart" or able to interconnect, thus increasing semiconductor content. One recent example of the momentum increase behind IoT expansion was reported this week by EETimes on the US Government's initial test sites:

The White House issued a Smart America Challenge aiming to get commitments to build several IoT testbeds around the country by April 2014. The networks would aim to show what so-called cyber-physical systems can do "to improve safety, sustainability, efficiency, mobility, and overall quality of life," according to the project's website.

Directly related to the IoT growth is the growth in wireless networking, which is seeing strong forecasts as the recent IC Insights report explores:

With the growing movement to conserve and monitor energy consumption, smart appliances with wireless networking capabilities are emerging.  In addition, cellular service providers are increasing their use of wireless networks to offload data traffic from their strained cellular networks.  The application space for wireless network technologies is vast and continues to expand.

In short, the present data on consumer confidence and spending for tech are positive and look promising for a positive end to 2013. Importantly though, the wider market view underscores that these positive 4Q13 data are not likely a function of seasonal cyclical upticks alone, rather are part of a wider positive trend for the semiconductor and electronics industry going forward.

Lisa Ann Cairns, Ph.D.
Written on Friday, 01 November 2013 20:35 by Lisa Ann Cairns, Ph.D.

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