Industrial chip market on a roll

The industrial semiconductor market will grow 9.7 CAGR during 2015-2018 says IHS.

Increased capex and continued economic growth, especially in the US and China, and will help spur demand and drive sales growth for industrial semiconductors.

Factory automation, building and home control and commercial aircraft are driving demand for industrial semiconductors. In fact, industrial semiconductor sales posted 4.7% growth Q3 2014 compared to Q2.

By the end of 2014 the market grew an estimated 16.8% over the previous year. Demand was especially strong for optical LEDs, which grew 23.4%, rising from $6.3 billion to $7.7 billion.

Discrete power transistors and thyristors posted 13.4% growth, rising from $5.5 billion in 2013 to $6.3 billion in 2014.

Industrial OEM factory revenues were expected to grow 8.3% in 2014 on increased sales in the building and home-control market. High-growth categories include LED lighting and IP cameras and other digital video surveillance products.

The global economy was strong in 2014 and, led by the US, it is expected to flourish through 2018. US economic growth is more broad-based than in other regions, with a more stabilized housing market, improved consumer finances and credit, and increased capital spending. US GDP growth is expected to reach 2.4% in 2014, 3.1% in 2015 and 2.7% in 2016.

The US accounted for 30.5% of all semiconductors used in industrial applications in 2013. China is the second largest industrial chip buyer, purchasing about 14% of all industrial semiconductors. Its economy will grow 7.3% in 2014, 6.5% in 2015 and 6.7% in 2016.

Revenue from optical chips for industrial applications will grow from $8.6 billion in 2013 to $15.9 billion in 2018. The optical chip segment includes LEDs for general lighting, which represented 72 % of the optical category in 2013, and will reach 78.4 % in 2018. Optocouplers used in motor drives in factory automation and energy distribution, conversion and storage, is the second biggest product category within optical ICs.

Analogue semiconductor revenue will increase from $6.7 billion 2013 to $9.9 billion in 2018, while discretes increase from $6.4 billion to $8.6 billion. The analogue semiconductor segment includes voltage regulators and reference, data converters, amplifiers and comparators, and interface ICs, which are used in factory automation, motor drives, and energy conversion and storage.

Image sensors are the smallest category in the optical chip segment. These sensors are currently transitioning from charge-coupled-device (CCD) image sensors to complementary metal-oxide-semiconductor (CMOS) image sensors that are widely used in security cameras, medical imaging equipment and military devices.

Industrial semiconductors with the strongest compound annual growth rates from 2013 through 2018 will include logic semiconductors at 13.4%, optical semiconductors at 13% and sensors and actuators at 10.8%.

Logic ICs are widely used in automation, including programmable logic controllers, digital control systems and communication and networking that extend across various markets, machine vision, and military applications in products including 3D printers, factory automation, commercial aircraft, LED lighting, digital IP cameras, climate control devices, renewable energy products, medical electronics and wireless application-specific testers.

Industrial 3D printers is a high growth category that will help drive industrial semiconductor usage in the coming years. It includes equipment used to manufacture objects through an additive process of laying down successive layers of material, until the entire object is created.

Avionics will continue to lead growth in the industrial segment. The commercial aircraft market offset the military aircraft market in the third quarter 2014. Total avionics revenue was expected to finish 2014 with 16.9 % growth.

Led by China and the United States, the factory automation segment has grown over the past five quarters. The segment is forecast to reach 5.9% growth in 2014.
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