With the signs of weakness in the smartphone market, chip makers have increasingly relied on growth from another area of ​​focus in recent years: the Internet of Things (IoT).
Over the years, we have been hearing the Internet of Things being promoted as the next big thing (Next Big Thing), and also accustomed to the industry's bold predictions for this market – including the emergence of tens of mega devices, and bringing over Billions of dollars in IC revenues, etc.
So far, some chip makers' financial reports have shown weak demand for smartphone chips, especially TSMC's quarterly report last month. Despite this, concerns about the smartphone market, especially Apple's iPhone, have not actually hit Apple's first-quarter earnings report, including iPhone X sales.
Tom Hackenberg
With the slowdown in the market this year, smartphones may or may not meet the requirements of chip suppliers, but it is clear from the first quarter of their release that the Internet of Things is driving the growth of semiconductor sales. Accelerated. Several companies have attributed sales growth to the Internet of Things, including Intel, Texas Instruments, STMicroelectronics, Cypress Semiconductor, and Silicon Labs.
Tom Hackenberg, principal analyst at IHS Markit Embedded Processors, said: "Over the past few years, these companies have reorganized and distributed the entire department to the IoT platform. That's why you hear so much about IoT-driven revenue."
According to IC Insights, the total semiconductor sales used to implement the IoT system function this year will reach approximately $24.5 billion, up from $21.3 billion last year. The market research company is currently updating its forecast for IoT chip sales, but according to last year's estimates, the market will grow to $31.1 billion in 2020.
IoT Semiconductor Market
Rob Lineback, senior market research analyst at IC Insights, said in an email reply to EE TImes: "In view of the weak growth of the smartphone market, IC-leading suppliers in the mobile phone sector are stepping up to provide IoT services."
Is the "Internet of Things" not a market?For chipmakers, one of the challenges in defining the IoT market opportunity is the IoT itself. Because it is not really a market, it can only be said to be a function. As Cysanne El-Khoury, president and CEO of Cypress, said, when Cypress sells connected chips to car manufacturers for connected cars, those components are still sold to the automotive market, not a separate one. "Internet of Things" market.
El-Khoury said: "Everyone is defining the Internet of Things and quantifying its data. It seems to be very powerful and cool. But I think the Internet of Things is more of a function than a purely Market."
Hassane El-Khoury
Because of this, El-Khoury said it is difficult to determine the impact of the Internet of Things on Cypress's business. The Internet of Things is one of the three focus areas of El-Khoury's strategy to launch the 'Cypress 3.0' strategy when it took over the CEO last year – in addition to the Internet of Things, including automotive and industrial. As explained by the El-Khoury example, there is a lot of overlap in these areas. Despite this, Cypress continues to sell microcontrollers (MCUs) and memory because these products involve many IoT-related products.
El-Khoury said that one measure of the impact of the Internet of Things on Cypress is the company's networking business, which grew 45% in 2017. â€
At the same time, Silicon Labs received nearly 50% of its sales revenue from the company's IoT business, and its revenue for the first quarter of this year was 17% higher than the same period last year.
Silicon Labs President and CEO Tyson Tuttle told EE TImes that this percentage will only continue to increase over time. Tuttle expects the company's IoT business to bring in $500 million in value this year, and that number is "just the beginning."
But in the end, Tuttle believes that the vision of the Internet of Things can only be truly realized when the market transitions from fragmented proprietary protocols, technologies and products to seamlessly implement devices-to-device communication and cloud-to-cloud communication. This is the main reason why Silicon Labs has strengthened its product portfolio through recent acquisitions (including $240 million in acquisitions of Z-Wave).
Tyson Tuttle
Tuttle said: "Some things have to be combined to get the market really off. In the end, we need to start designing products with the end user's ideas."
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