Forecasts for an important set of components have significantly improved with compound annual growth rates (CAGR) through 2018 in the double-digits and up to low-twenties beginning with this year. Notably, these components reach across various industry sectors beyond smartphone and tablet devices and into industrial equipment such as the boom in machine-to-machine (M2M) solutions for the inaccessible reaches of Oil & Gas drilling and pipelines.
Sensor and Actuators growing
Generally speaking, MEMS components have seen tremendous growth over the past five years, but over the past two years from 2011-2013, the sector experienced plateaus which are now set to reverse trend with double-digit growth forecasted for 2014 and beyond. According to the most recent 2014 O-S-D Report from IC Insights, "[…] a new wave of stronger growth is expected to begin in 2014 as the global economy improves and new systems applications rejuvenate sales [of sensors/actuators] […]."
According to the IC Insight's report, CAGR values for the 2013-2018 year period for sensors and actuators are expected to reach 11.7% and valued at US $15.1 billion. Already this year, growth forecasts are projected to be in the 14% range equating to roughly US $9.9 billion. The drivers for this significant growth among the entire sensors and actuators component group include the following:
Among the market growth drivers identified in the report are new multi-sensor smartphone platforms, wearable systems (such as smart watches, wireless medical devices, and personal activity trackers), “Internet of Things” applications, radio-frequency filtering actuators, pocket-sized projectors built with micro-mirror devices, laboratory-on-chip testing tools for drug, disease, and DNA analysis, microphone chips, fingerprint-identification sensors, and more automotive sensors for higher levels of safety and automation of driving.
[…] all product categories in the sensors/actuators market [are] strengthening […]. New record-high sales are expected to be set in pressure sensor (+18% to $1.6 billion), acceleration/yaw sensors (+14% to nearly $2.9 billion), and magnetic-field sensors (+13% to $1.6 billion). The actuator category is projected to end its two-year sales slump in 2014, rising 11% to about $3.6 billion […].
M2M moving O&G to new heights
Not only is the above sensor and actuator growth being adopted into new O&G solutions for a vast array of exploration and production (E&P) as well as down-hole drilling and distribution technology solutions, the ability to relay these critical data in real-time to the surface stations is essential. The capability to immediately receive information on extremely remote activities for the O&G industry is enabling not only cost-savings, more precise E&P, but also improving safety and preventing costly delays or worse.
According to Berg Insight's recent report on M2M for the O&G sector, on-board electronic solutions have been advancing rapidly along with the rest of the tech world, and the CAGR for 2013-2018 period is forecast to see tremendous growth. The ability to provide connectivity in the form of M2M data transfer solutions across various subsectors of the O&G industry will see rapid adoption:
Growing at a compound annual growth rate of 23.1 percent, the shipments [of Oil & gas M2M devices with cellular or satellite communication capabilities]are expected to reach 263,000 in 2018. Compound annual growth rates for cellular and satellite based devices will be 22.1 percent and 27.5 percent respectively during the same period. The installed base of active oil & gas M2M devices is forecasted to grow at a compound annual growth rate of 21.4 percent from 423,000 units at the end of 2013 to 1.12 million units by 2018. The installed base of cellular and satellite based M2M devices in 2018 are forecasted to be 871,000 units and 244,000 units respectively. Berg Insight anticipates that pipeline monitoring and tank monitoring will be the top two M2M applications in the oil & gas industry. On-shore well field equipment will be the most common wireless application in the upstream segment of the oil & gas market.
Connected growth trends
While these CAGR forecasts are great news, what should not be overlooked is the coherent market picture that is being painted. When we put the growth of these components alongside of sectors such as automotive, health and fitness, and other consumer electronics such as wearables, and add to it the solid promise for emerging market consumers and low-priced smartphone devices, there is significant reason to be positive about the rebound this year and forward.
Smart device diversification is truly here and the evolution of the Internet of Things (IoT) is a broad-reaching wave driving growth across the many sectors of the semiconductor and electronics industry. Please see our recent Smith MarketWatch Quarterly editions, as well as the latest one discussing the opportunities and challenges of emerging market diversification (available to subscribers now – public availability to follow the end of the month). Free subscription here.