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IoT, Wearables Fuel Booming Sensor Market

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The growing popularity of wearable devices and the ramp-up to an Internet of Things (IoT) enabled future are driving sensor shipments higher, according to a new report from IC Insights, a semiconductor market research firm.

Last year, worldwide sensor sales reached a record $5.7 billion, after experiencing a compound annual growth rate (CAGR) of 17.1 percent between 2009 and 2014. And the future looks similarly bright.

IC Insights expects that between 2014 and 2019, sensor shipments will surge with a CAGR of 11.4 percent, culminating in a total of 19.1 billion sensors by 2019. Revenues will rise 6 percent annually as a result.

In 2015, suppliers will ship 12.9 billion sensors, a 16 percent gain compared to 2014. Sensor sales will reach $6.1 billion, up 7 percent from last year.

Despite the rosy outlook, IC Insights’ forecast indicates that vendors will need to work harder to meet their sales goals.

Prices are plummeting, cautions the analyst firm. “Average selling prices (ASPs) for all types of semiconductor sensors are forecast to fall by a compound annual growth rate (CAGR) of -5 percent in the next five years, which is double the rate of decline in the previous five years (2009-2014),” said the firm in a statement.

“ASP erosion is partly a result of intense competition among a growing number of sensor suppliers pursuing new portable, consumer, and IoT applications.” In addition, “rock-bottom” pricing required to attract high-volume business are affecting profitability. “The fall in prices is not only undermining revenue growth in the highly competitive sensor segment, but it is also now squeezing profit margins among suppliers.”

While consumers are flocking to wearables, businesses are also driving demand for technologies that report the state of the world around them. Last summer, a study from PricewaterhouseCoopers (PwC) revealed that businesses are warming to IoT sensors. PwC discovered in its survey of 1,500 business and technology executives that 25 percent of top performing companies had plans to adopt sensors in 2014 versus just 18 percent in 2013.

Sensors based on microelectromechanical systems (MEMS) technology accounted for 80 percent of sales in 2014. “MEMS-based product sales grew about 5 percent to a record-high $7.4 billion in 2014 from $7.0 billion in 2013,” noted IC Insights. Accelerometers, gyroscopes and other sensors were responsible for fifty-three percent of MEMS semiconductor sales, or $3.9 billion, last year.

“In terms of unit volumes, sensors represented 80 percent of the 5.1 billion MEMS-based semiconductors shipped in 2014 (4.1 billion) with the remaining 20 percent being actuators (about 1.0 billion),” stated the firm.

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.

Photo courtesy of Shutterstock.

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