TrendForce 2016 IT Industry Forecast – Competitions Among End Products to Expand Into Emerging Markets Next Year as Mobile Devices Drives IoT Growth

Global market research firm TrendForce held its 2016 IT Industry Forecast Conference at Room 101 of the NTUH International Center in Taipei, Taiwan, on October 15, 2015. The conference was divided into two sessions, with the first part devoted to forecasts on tech industries for 2016. TrendForce analysts specifically addressed thematic issues such as innovative end market solutions and trends in communication technologies.

Below is a summary of their presentations.

Smartphone shipment growth to slow in 2016 with China and India becoming the main growth centers

Major Chinese smartphone vendors – Huawei, Lenovo and Xiaomi – have risen to become three of the top five international smartphone brands this year. Supported by a large domestic market, these vendors have expanded into the emerging markets, Europe and the U.S. with high cost-performance products. However, challenges loom ahead as the feature phone market falters and the growth of the smartphone market enters a plateau period. Smartphone shipments in 2016 are expected to fall steadily, and their annual growth rate will just reach 7.7%.

The driver of the global smartphone market next year will come from the replacement demand for 4G smartphones in China, according to Kelly Hsieh, TrendForce senior manager for mobile communication and end device research. Vendors will also be very active in the emerging markets, with India being the focus of their attention. Though the smartphone penetration rate in India is currently only around 20%, local telecom operators are working hard to expand mobile network coverage for suburbs of first and second-tier cities. Usage of smartphones will effectively increase as telecom operators start offering devices with bundle plans.

Three major vendors will dominate the VR device market next year and sales will soar to 14 million units

The introduction of the Apple Watch did not generate high growth in the smartwatch market as initially expected. Therefore, wearable device developers are now shifting their interests to other attractive products, and virtual reality (VR) devices presently show a lot of potentials. Jason Tsai, TrendForce wearable device analyst, said the sales of VR devices is estimated to soar to 14 million units next year, when vendors will be making mass shipments of their products.

With content offerings being the decisive factor the upcoming VR device war, products from HTC, Oculus and Sony will be the most competitive in the market. HTC Vive, for instance, will be supported by Steam, a digital content distribution platform. Oculus Rift, on the other hand, is championed a large group of independent developers. Sony’s VR headset, PlayStation VR, will have access to its parent company’s massive collection of multimedia resources. The spotlight of the competition in the VR scene next year will be on these three vendors as they make advances in the market and become the dominant players.

As IoT branches into different applications, developing better services will become the new competitive advantage

Breakthroughs in key technologies, the proliferation of mobile devices and the explosive growth of the Internet have accelerated both the market and application growth of the Internet of Things (IoT). Smart homes, smart cities, and the much-discussed Industry 4.0 are some of the fields that are seeing the implementation of IoT-related technologies. And within the IoT sector there are various applications, including healthcare, retail, logistics, transportation and other specific vertical industries. Together these applications are projected to account for 70% of the sector’s total revenue. 

According to TrendForce IoT analyst Jimmy Liu, participants in the IoT sector will continue to focus on developing service-based applications. Cultivating vertical industry expertise and cross-industry collaboration will be essential to creating new kinds of services. The participation of the “Maker” communities can also complement the efforts of private enterprises and stimulate the market environment. In addition to improving efficiency and reducing costs, advances in the IoT sector will also help create a value-added, sharing economy that is more human oriented.

Worldwide sales of industrial robots will reach 290,000 units in 2016 with Asia being the primary growth driver

Harrison Po, TrendForce industry consultant, noted that the global market demand for industrial robots has been rising in recent years due to factors such as increase in the elderly population, rising wages, and labor shortage in the manufacturing sector. On an annual basis, the sales of industrial robots worldwide are projected to grow 15% in 2015 and 10% in 2016, totaling 264,000 and 290,000 units respectively. In 2014, the top three markets for industrial robots were China, Japan and the U.S. However, Asia as a whole is set to become a significant market, and the region may even outpace Europe and the U.S. in demand growth by 2016. 

Currently, industrial robots are most widely used in the auto manufacturing industry. Growth in this application will come from the emerging markets, where investments in car assembly plants are taking place. Another source of demand for industrial robots will be the expansion of the plug-in vehicle battery production.

In addition, opportunities are abound in the service robot market as more people around the globe are becoming elderly and/or living alone. Currently, service robots are primarily designed to do domestic chores such as vacuuming.

China becomes the world’s largest plug-in vehicle market and automotive electronics market will shine in the next three to five years

Growth in the auto market has fallen short of expectations this year due to the slowdown of the global economy. China in particular has registered flat growth contrary to the impressive performances of the past years. However, China’s plug-in vehicle market is significantly ahead of those in other countries in development, and it has overtaken the U.S. in the first half of 2015 to become the world’s largest. Based on TrendForce’s estimation, plug-in vehicle sales will surpass 450,000 units this year, and the market is expected to see steady growth in 2016.

According to Eric Chang, TrendForce automotive electronics analyst, there are three major trends currently developing the auto industry. First, there is the rapid development of automated driving systems. Second, Connected Cars have become the forerunners to smart cars. Third, breakthrough opportunities are emerging for plug-in vehicles in the ride-sharing market. Chang stated that the automotive electronic market will experience a boom in the next three to five years as these trends converge.