“IoT Analytics is a leading provider of market insight and competitive intelligence for the Internet of Things (IoT) and Industry 4.0. It has conducted extensive research on the Internet of Things semiconductor market and believes that the performance of chips in the technical field is stable.
The penetration rate of semiconductor components classified as “IoT” is expected to increase from 7% in 2019 to 12% in 2025.
The four key elements that promote the development of semiconductors for the Internet of Things are: MCU, connection chips, AI chips, and security chips and modules.
The increasing popularity of IoT chips will force chip manufacturers to pay more attention to typical IoT requirements (for example, ultra-low power consumption, smaller size, built-in security)
Equipment manufacturers should see a large number of new chips specifically designed for the Internet of Things.
IoT Analytics is a leading provider of market insight and competitive intelligence for the Internet of Things (IoT) and Industry 4.0. It has conducted extensive research on the Internet of Things semiconductor market and believes that the performance of chips in the technical field is stable.
IoT Analytics tracks the Philadelphia Semiconductor Index, which reflects the 30 largest semiconductor companies in the world, and has grown five times in the past five years (from $80 in January 2016 to $416 in January 2021). The index not only easily beat the Nasdaq index (increased by 2.8 times in the same time frame), but also beat other technology indexes, such as cloud computing (the SKYY index increased by 3.5 times in the same time frame).
Semiconductor: a strong and leading technology field
This amazing value performance of semiconductor companies can be attributed to many factors. Knud Lasse Lueth, CEO of IoT Analytics, commented on the results of the study: “The most notable thing is that the industry has benefited from the demand for more and higher-value semiconductor components from several emerging technologies. Key drivers Including big data analysis, mobile communications, games, connected and semi-autonomous vehicles, and the rapid growth of Internet of Things (IoT) devices.”
Satyajit Sinha, senior analyst at IoT Analytics, added: “According to our estimates, the number of active IoT device connections will increase from 3.6 billion in 2015 to 11.7 billion in 2020. By the end of 2025, we predict that there will be a total of 30 billion. Internet of Things Connectivity. The rise of the Internet of Things semiconductor market is broad, involving most industry sectors, including industry, automotive, energy and utilities, and healthcare.”
In recent years, the demand for consumer IoT devices such as smart watches and smaller wireless accessories has been particularly high, which has prompted several companies that did not manufacture IoT devices a few years ago to enter the IoT ecosystem (for example, many smartphone manufacturers) business).
The current explosive growth of IoT devices will continue to drive the IoT semiconductor market, and may further promote semiconductor innovation as production increases. The latest IoT Analytics report on this topic predicts that the IoT semiconductor component market will grow from USD 33 billion in 2020 to USD 80 billion in 2025, reaching a compound annual growth rate of 19%. In particular, the following four components will become the focus of attention: IoT microcontrollers (MCU), IoT connectivity chipsets, IoT AI chipsets, and IoT security chipsets and modules.
Four key elements to promote the development of IoT chips
IoT Analytics defines IoT chips as those chip components that can individually or collectively contribute to the functions of IoT devices or other IoT devices. Therefore, some chip components comply with IoT standards.
Our research shows that the following four aspects are very important:
1. Internet of Things Microcontroller (MCU)
Contrary to many other technical topics, the Internet of Things has a set of typical use cases and applications. All these applications require different levels of performance and functionality. Generally, MCUs (rather than MPUs) are well suited to provide the required flexibility (for example, in terms of processing power), while providing very economical hardware options for applications. The interesting trend is that IoT MCUs have now evolved from general-purpose MCUs to certain MCUs specific to IoT applications (for example, in the fourth quarter of 2020, NXP launched the S32K3 automotive IoT MCU series).
With these trends, IoT Analytics predicts that the penetration rate of IoT MCUs in the general MCU market will increase from 18% in 2019 to 29% in 2025. Especially 32-bit MCU, for example, the well-known Raspberry Pi represents the best choice for IoT applications.
2. Internet of Things Connected Chipset
The IoT connected chipset is the core of all IoT connected devices and represents the largest IoT chip market area (35% of all IoT semiconductors in 2020). In recent years, the lack of globally recognized IoT connectivity standards and the different requirements from different use cases and applications have led to a variety of connectivity options.
IoT Analytics identifies 21 major (from a semiconductor perspective) IoT connectivity standards, including cellular IoT (such as 3G or 4G), WLAN (such as Wi-Fi) and wired connections.
Cellular chipsets play an important role in the market growth of IoT connectivity chipsets. IoT Analytics is expected to be affected by 5G (for low-latency and high-bandwidth IoT applications) and LPWA (for low-power, low-bandwidth, low-cost IoT applications). Both cellular/LPWA licensed and unlicensed LPWA technologies have promoted this market, and LoRa-based chipsets and NB-IoT-based chipsets will continue to dominate this market.
Wireless local area network. WLAN chipsets are driven by the new Wi-Fi 6 and Wi-Fi 6E standards, which create high growth opportunities for the IoT Wi-Fi chipset market. The upgrade throughput of Wi-Fi 6 is almost four times that of Wi-Fi 5, thus opening the door for IoT applications with higher bandwidth requirements (such as head-mounted AR applications).
Bluetooth. The IoT Bluetooth chipset market is currently driven by audio and entertainment and smart home-based devices. The relatively new Bluetooth 5 chipset market is mainly focused on IoT applications and makes emerging applications possible through beacons and location-based services (such as asset tracking) and greater flexibility for multiple applications and use cases.
3. Internet of Things artificial intelligence chipset
Many applications seek more complex data analysis and hope to perform these data analysis in real time. In recent years, this has placed increasing demands on embedded AI chips at the edge of the Internet of Things. IoT Analytics predicts that between 2019 and 2025, the global IoT AI chipset will grow at a compound annual growth rate of 22%. This growth is driven by parallel computing provided by three different types of chipsets: GPU, ASIC and FPGA. FPGA-based AI chipsets are critical to the cloud and 5G era. These chips help reduce latency, improve memory access and make communication between devices more energy-efficient. Traditionally, data centers have used FPGAs as auxiliary accelerators for the CPU.
Recently, however, companies such as Microsoft have begun to use FPGAs in the data path where high-speed Ethernet is directly connected to the FPGA instead of the CPU.
4. IoT security chipsets and modules
According to Nokia’s Threat Intelligence Report 2020, IoT devices now account for 32.7% of the observed infected devices. By 2020, the share of IoT poisoning has increased by 100%. The increasing threat of IoT devices requires constant adjustments to security solutions. In many cases, traditional software security is not enough for the overall security system. Therefore, there is an urgent need to ensure data flow from edge devices to the cloud and hardware security.
Although companies usually have multiple options for implementing embedded hardware security, it turns out that implementing it at the MCU/SoC level is the most desirable because it allows data to flow safely through the internal bus. This can be done by introducing security elements (SE) and physical unclonable functions (PUF) into embedded systems.
Another important security function is the “key injection” and encryption key management in the secure area/PUF to ensure the secure identity of the device and create a secure channel for the data flow inside the device and from the device to the cloud. This integration achieves a “hardware root of trust” with asymmetric encryption. It also creates a secure channel for the secure flow of data from the chip to the cloud, thereby ensuring the security of static data and transmitted data.
The IoT semiconductor market is still in its infancy. As the penetration rate of semiconductor components classified as “IoT” does not increase, topics such as IoT MCUs, IoT connection chips, IoT AI chipsets, and IoT security chipsets will become more and more important in the future. It is hard to imagine that the semiconductor index will increase five times in the next five years. But what is certain is that the Internet of Things will become the driving force of these semiconductor companies more than ever, and can provide important new business flashpoints.