GET REAL - WHY TEXAS INSTRUMENTS AND INFINEON TECHNOLOGIES PROVE IOT AND AI ARE NOT WINNING STRATEGIES FOR INDUSTRIAL SEMICONDUCTORS
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FOR IMMEDIATE RELEASEFor more information, please contact:
Colin Barnden
Principal Analyst
Semicast Research Ltd
Tel: +44-117-973-1110 (direct)
@semicast_res
colin.barnden[at]semicast.net / News Release
Get Real - Why Texas Instruments and Infineon Technologies Prove IoT and AI are Not Winning Strategies for Industrial Semiconductors
London, England; May 3, 2017; According to the latest analysis by Semicast Research (@semicast_res), Texas Instruments was the leading vendor of semiconductors to the industrial sector in 2016, ahead of Infineon Technologies. Intel, STMicroelectronics and Analog Devices completed the top five.
Semicast defines the industrial sector to include traditional areas such as factory automation, motor drives, lighting, building automation, test & measurement and power & energy, as well as medical electronics and industrial transportation; the aerospace & defense sector is excluded from the analysis. Using this definition, Semicast estimates that revenues for industrial semiconductors totaled USD 42.2 billion in 2016, a rise of about four percent from USD 40.7 billion in 2015.
Semicast’s industrial semiconductor vendor share analysis ranks Texas Instruments (TI) as the leading supplier in 2016, with an estimated market share of 7.9%, ahead of Infineon with 6.6%, Intel (5.2%), STMicroelectronics (5.1%) and Analog Devices (3.7%). While M&A activity has had a significant influence on vendor share rankings in the industrial sector in recent years, 2016 was much quieter in comparison. The most notable event was the acquisition of Linear Technology by Analog Devices, which closed March 2017. Semicast estimates the combined operation to have been joint third with Intel, with a market share of 5.2%. In addition a combined Intersil and Renesas (which completed February 2017) would have been in ninth position last year, ahead of ON Semiconductor and only fractionally behind Micron.
In practice the industrial sector is a collection of markets within a market and is heavily fragmented across applications, OEMs and regions. Accordingly, it has no dominant semiconductor vendor, with the top ten together accounting for only around forty percent of the total in 2016. Colin Barnden, Principal Analyst at Semicast Research and study author commented “The vendor share ranking shows the importance of product expertise to ensure success in the industrial sector. For example, TI is the market leader for analog ICs; Infineon the leader for power devices; Intel for microprocessors; and Nichia for LEDs.”
TI has now been the leading supplier of industrial semiconductors since 2012 and has maintained its leadership entirely through organic growth, its last acquisition being National Semiconductor way back in 2011. Promotion of IoT as the next big thing for the semiconductor industry has hit peak hype, with many forecasts predicting billions of units and trillions of dollars, but with little consensus of what IoT is, or will be, other than big. Barnden added “As the vendor share ranking for the last five years has demonstrated, no company has developed an IoT strategy that knocks TI off the top of the leaderboard for industrial semiconductors and neither is that likely to be accomplished by means other than mergers or acquisitions.”
Semicast sees TI, and Infineon and Nichia too, succeeding in the industrial sector not from a focus on IoT, but from a focus on what could be termed the real world. In comparison, IoT and other equally hyped trends such as AI, AR and VR, could be termed the machine world. These categories align neatly with specific functions, and therefore semiconductor product types, as follows:
· Real World: functions of measure, move, sense and indicate, which correspond to the product categories of analog, optoelectronics, power & discretes and sensors.
· Machine World: functions of authenticate, control, process, store and communicate, which correspond to the product categories of logic, memory, microcontrollers & DSPs and microprocessors.
Mapped on to Semicast’s industrial semiconductor market forecast, real world demand accounted for approximately two-thirds of revenues in 2016 and is forecast to grow at an average of about eight percent a year to 2021, compared with just over five percent a year for machine world demand.
For all the forecasts, headlines and keynotes promoting the riches offered by IoT and AI in the machine world, success in the industrial sector remains dependent on plain old analog, power and optoelectronics, as demonstrated by the leading positions maintained by TI, Infineon and Nichia. Barnden summed up “After nearly a quarter-century writing about the semiconductor industry, I am reminded of the old saying that the more things change, the more they stay the same. Prepare to watch the term “IoT” fade slowly from a slide deck near you.”
2016 Industrial Semiconductor Vendor Share Ranking
Texas Instruments 7.9%
Infineon Technologies 6.6%
Intel 5.2%
STMicroelectronics 5.1%
Analog Devices 3.7%
NXP Semiconductors 3.5%
Nichia 2.8%
Micron Technology 2.3%
ON Semiconductor 2.0%
Renesas Electronics 1.8%
Top 10 Total 40.9%
Others 59.1%
2016 Market Size: USD 42.2 billion
Source: Semicast Research (April 2017)
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Notes for Editors
Semicast has a strategic focus on industrial electronics and provides on-going research services to the global industry. Its Industrial/Medical Electronics & Semiconductors Service has been developed for semiconductor and component suppliers to understand detailed trends for industrial and medical electronics equipment revenues, equipment manufacturer market shares and semiconductor trends.
Semicast is a respected provider of independent market research on the semiconductor and electronics industry. It specializes in coverage of industrial and medical electronics and semiconductors; automotive electronic controllers; automotive audio, infotainment & navigation systems; automotive semiconductors; and 32-bit microcontrollers.