IC Industry Unaffected by Latest Crazes in First Half of This Year and Expects to See 3.1% Yearly Revenue Growth, According to TrendForce

The IC sector is spurred by demands related to IoT businesses and 4G LTE technologies, but it is also dragged down by the below-expectation sales of PCs and mobile devices. On the whole, the sector’s revenue performance has been slightly disappointing so far this year. The latest research from Topology Research Institute (TRI), a division of TrendForce, finds there are six separate years within the 1995~2014 period when the IC sector had a year-on-year revenue decline for the year’s first half. Among the six years, only one saw annual revenue growth (2013 with 1.9%). The other five years by contrast saw decline. With no noticeable change in the consumer preference, TRI does not expect strong revenue growth for industries across the IC sector for 2015, with the exceptions of industries related to memory products. TRI also estimates that the sector’s revenue for this year to be US$204.1 billion, representing a marginal annual growth of 3.1%. The revenue ratio between this year’s first half and the second is 46:54. 

“Intel-based servers, PCs, notebooks, and other productivity devices made up one major revenue driver for the sector this year,” said Jian-Hong Lin, research manager for TRI. “The other big driver is personal mobile devices like smartphones and tablets.” 

IoT is now a trending topic and wearable devices are enjoying the limelight owing to the introduction of the Apple Watch. However, the contribution of IoT and wearable products to the IC sector’s revenue growth is limited because their sales numbers are small and they carry relatively fewer IC components. 

Going into the second half of this year, IoT will remain the hottest topic in the IC sector. Secure element especially emerges as another critical end-to-end element in an IoT ecosystem following connectivity, sensor, microcontroller and power management integrated circuit. While the development of connectivity technologies can take on multiple paths, advances in cloud storage and sharing technologies have been mainly related to data integrity and privacy. These two issues get the most attention from users who use cloud services to move and manage large amount of information, and they together with secure element constitute the most evident theme in the IoT development, the progress towards better security. 

With the end products not yet clearly defined, IoT business companies are also investing heavily in data centers since these facilities are closest to end applications in terms of connection. Data centers currently make up a field within the IoT industry that is posting the fastest growth in both investment and revenue. 

The ongoing competition related to 4G LTE technologies is another area in the IC sector that is getting notices. The replacement sales of smartphones in the emerging market are constantly affecting the product portfolio and pricing strategies of major IC companies. Chip manufacturers are now accelerating their development of 4G products since most of smartphone products in China support this standard. This also puts pressure on companies are still concentrating on 3G products. According to Lin, the leading companies will lower prices on their products in response to the competition from the new market entrants, and mid-sized IC companies will speed up their R&D efforts involving 4G products. All of the industry players have set their sights on the emerging markets, where smartphones are replacing the older functional mobile phones.