With IHS forecasting 58 billion connectable devices by 2022, demand for the sensors that will effectively “connect” those devices via the Internet of Things (IoT) is on the rise. Enabling everything from smart homes, to health monitoring devices to wearables on the consumer side, and drones, robotics, and agricultural asset tracking on the industrial side, the sensor market has grown in stature and importance within a fairly short amount of time.
According to Jérémie Bouchaud, IHS Technology’s director and senior principal analyst, MEMS and Sensors, industrial IoT is expected to generate additional revenue for MEMS in the range of $334 million by 2018 (up from just $58 million in 2013). Key applications that will be driving that growth include asset tracking, smart grid, and smart homes. Demand is also rising for accelerometers and pressure sensors that go into applications such as building automation, agriculture, and medical.
Bouchaud says that the consumer wearables market (for instance, the FitBit), which has been fairly limited until recently, is now blossoming. He credits the introduction of the Apple Watch with helping to drive that demand which, in turn, boosts the sensor market. He also sees more China-based OEMs getting into the smartphone business—a sector once dominated by Apple and Samsung.
“Those two players used to buy 60 or more percent of the sensors used in handsets,” says Bouchaud. “Now we’re seeing the Chinese OEMs quickly becoming a third major purchasing power for these sensors.”
That shifting dynamic is also affecting the distribution of the sensors themselves, particularly within the automotive market.
“Large OEMs are buying some sensors direct,” says Bouchaud, “but a growing number of them are allocating their contracted, low-spend items to local design houses which, in turn, buy their sensors through distributors.”
Stephan Ohr, a research director with Gartner, says the total sensor market (including image, inertial, magnetic, pressure, temperature, and “other” sensors) is growing at a compounded annual rate (CAGR) of 40 percent. That CAGR will help the market grow from $961 million in 2013 to a whopping $10 billion by 2020. According to Ohr, most of the growth will be seen in the magnetic (51.6 percent), inertial (42.9 percent), and “other” sensor categories (51.2 percent).
“Overall, we expect the sensor market to show a lot of growth,” says Ohr, who points to the semiconductor industry as one particularly large user of sensors, and the driver of the “fastest and highest CAGR for sensors over the next five to seven years.” He says the fact that sensors are getting more sensitive, affordable, and easier to use—compounded by the fact that signaling circuit conditions are good—is also helping to drive demand. “We’re at the point where things you would never have considered putting a sensor on (a dog collar, for example) now include sensors,” says Ohr.
In terms of industrial usage, Ohr says the introduction and growth of IoT (which he defines as “everything in the world having its own IP address and accessible via the Internet in an affordable, user-friendly format”), have given sensors “an extra boost.” Industrial process monitoring in steel and chemical plants, for instance, can be facilitated by sensors that allow organizations to see how their machines are behaving and/or when they need required maintenance. “Start adding up all of these new ideas and the billions of new wireless sensor nodes that are out there,” says Ohr, “and the sensor market grows right along with these [innovations].”
Looking ahead, Bouchaud says he expects more manufacturers to incorporate fingerprint sensors into their products.
“Right now this is the fastest-growing sensor market in terms of purchasing power,” says Bouchaud, who hints to a possible supplier dearth in the near future. “There’s definitely a need for more established suppliers in the fingerprint sensor market.”