Closing out the first half of 2014 (1H14) brings us a good amount of data and rankings, while also giving us more solid footing for looking into the next quarter-plus of potential market movement. 2014 is proving to be a bit volatile, but, overall, is coming in with positive surprises for most, thanks to diversification opportunities from regional and price tiers and new market verticals.
IC sales on the rise
IC Insights released its preview of the top IC and Opto-Sensor-Discrete (OSD) semiconductor sales this week. As IC Insights itself notes, "It is interesting to note that the top four semiconductor suppliers all have different business models. Intel is essentially a pure-play IDM, Samsung a vertically integrated IC supplier, TSMC a pure-play foundry, and Qualcomm a fabless company." The 1H14 review shows an overall rise of 10% in semiconductor sales year-over-year, which comes in 3% higher than IC Insights itself had forecasted "for total worldwide semiconductor market growth this year."
Interestingly, and pointing to the amount of industry changes occurring presently, the majority of companies in the top 20 ranking switched positions in their rank-order from last year's 1H13 results. We are seeing that there is significant momentum, not just in new opportunities, diversification, and new markets, but also in who is able to adjust strategic plays and markets and have the supply chain agility to navigate the current type of quick changes and price pressures. In these types of highly-dynamic markets, supply and inventory management partners like Smith & Associates, who can assist with sourcing and hubbing (among other services at a global level), are essential.
One important growth sector for semi has been the expansion of industrial electronics, which is forecasted to reach a possible 9.4% rise in revenue over 2013, according to a recent report by IHS. This positive growth trend is likely to be reached in light of 1Q14 having already seen growth in revenue reaching 17.5% year-over-year, which is a sequential rise of 0.6% quarter-over-quarter, made more significant by the fact that the 1Q period is typically the slowest of the year for the industry, according to the same IHS report. The reasons for industrial growth, as cited by IHS, include:
In the first quarter industrial electronics drew strength from an improving global economy. The sectors that performed best included factory automation, commercial aircraft, light emitting diodes (LEDs) for lighting, climate control, renewable energy, medical electronics, application-specific testers and transportation.
EE Times Asia extends the analysis, adding that LED drivers are particularly poised for growth and will certainly lead the industrial demand, as well as the advances and rapid adoption seen for medical electronics; meanwhile, embedded and analog chips are also set for growth.
CE ruggedizing and expanding
Looking down the path into the Consumer Electronics (CE) market, we see some momentum heating up, as well, but there is still quite a bit of growth yet to start. CE represents a vitally-growing sector for the semiconductor and electronics industry, particularly as enterprise PC demand has slowed and the BYOD trend continues, shifting some sales away from enterprise and onto CE market sales as working consumers pick their own devices and purchase them independently.
However, it is outside of the workforce that we are seeing significant amounts of new devices and accessories rise. These accessories are not just chipless cases and such, which carry no weight for our more-narrowly defined view of the industry; these are accessories that add power, durability, connectivity, and other features to existing devices. One example of the rise of the electronics accessories market can be seen this week in Salt Lake City, UT, where the Outdoor Retailer Market is taking place. On display here are CE-ready device accessories that include miniature solar panels for battery recharging and storing; integrated wearable devices in the form of attire, backpacks, and similar accessories; and other in-demand products for ruggedized computing for the outdoor adventurer. While fashion remains a challenge for many wearable designers and the sleekness of smartwatches continues to be highly competitive for daily use and wear, outdoor enthusiasts are gaining significant momentum in the wearable device space as different types of features are in-demand and are being met quickly, with low price points that are attracting CE purchases. Perhaps this is one of the winning domains to take the first-mover for mass adoption in wearable computing.
Running the engine for opto in 2015 cars
Finally, another area of growth is the automotive sector, where the increase in automotive semi content is heating up as car make and model differentiators are coming down to the in-vehicle experiences directly related to infotainment. Also in the driver's seat for increased sales are on-board cameras for reversing and viewing, now with multi-view capabilities and significantly-improved views, optics, and control.
As Reuters reported this week, with the slowing of high-end smartphones:
South Korean smartphone camera makers are tapping the surging yet more technologically demanding market for vehicle cameras to dull the impact of slowing growth in global handset sales.
High-end cars can carry as many as eight cameras to visually aid parking or trigger emergency brakes. That number could reach 12 when cameras replace side-view mirrors, according to Mcnex Co Ltd, a phone camera supplier of Samsung Electronics Co Ltd and Korea's biggest car camera maker.
This automotive opportunity holds tremendous promise for the camera and optics market, considering not only the increase in cameras per device (vehicle versus smartphone), but also the upcoming 2018 safety mandate in the US, which will likely be adopted globally due to the number of pedestrian lives and injuries that can be spared from accidents caused while backing up. Again, the question of ruggedized electronics comes into play for this use case, as car cameras demand significantly more temperature variation and durability to extremes, vibration, dirt, and other environmental issues than a smartphone carried by a person. Despite the additional ruggedized requirements and automotive-level quality requirements, this is a promising opportunity for diversification for the camera and general optic sector.