Global Semiconductor Consumption Forecast to Rebound with 6.5% Compound Annual Growth Rate

Published at 10:00 AM on 10 October 2013

Automotive and Industrial Sectors Expected Sources of Largest Increase

PwC’s Semiconductor Report: Spotlight on Automotive forecasts an increase of US$109 billion between 2012 and 2017 for the global semiconductor market, a compound annual growth rate (CAGR) of 6.5% for the period. Automotive is anticipated to be the fastest growing industry segment with an expected CAGR of 9.4%, followed by the industrial sector, with an 8.8% CAGR through 2017. Though automotive and industrials are expected to contribute substantive growth for semiconductors, the data processing and communications segments will remain the largest overall semiconductor users  in the period ending in 2017.

Automotive drives demand

Two major trends will expedite semiconductor growth in the automotive industry:  the extent and pace of change in the industry, and the proportion of electronics found as standard equipment
in cars. One main change in the automotive industry is the shift in vehicle ownership, as consumers shift to ‘pay as you go’ services in larger cities. Extensive urbanisation will accelerate this trend, with a forecast that by 2050, over 80% of the population in developed countries and 60% of developing countries will live in urban environments.

 

Felix Kuhnert, PwC European Automotive Leader, said:

 

“Cars are fast becoming computers on wheels. Mobile internet access, constant communication
possibilities, digital dashboards and electronic driver assistance systems of all sorts will soon be the norm in all segments, not just in premium or luxury vehicles. Another factor is the electrification of the drive train which relies on extremely complex control electronics.”

 

The proportion of semiconductor content available in cars will be affected by five key areas:

 

  • Regulation: Energy efficiency, emissions and safety are expected to act as
    primary factors for growth. European Union (EU) environmental standards, for
    example, are likely to require a 30%-40% emissions reduction by 2020.
    Sophisticated semiconductors would be needed to ensure compliance.
  • Sustainability: Engines will continue to become more fuel efficient and
    efficiency improvements will rely considerably on semiconductors.
  • Safety and security: Historically, safety and security
    features have been more prevalent in the luxury car market. As affordable
    electronic equipment makes its way to entry-level vehicles, it is spurring
    demand for in-car devices that monitor safety conditions and prevent accidents.
    Applications such as electronic steering, braking and driver assistance systems
    using radar will need technology supported by semiconductors.
  • E-Mobility: The growth of hybrid and electric cars will increase demand for more
    sophisticated and powerful batteries. Applications to monitor and manage
    battery performance will in turn drive demand for semiconductors.
  • Body andconvenience: Desire for more enhanced preferences
    such as lighting, heating and information and entertainment systems will
    increase the semiconductor content in cars.

 

Jass Sarai, UK technology leader at PwC, said:

 “There’s a tremendous opportunity for the semiconductor sector to grow and flourish in the coming five years. The automotive sector offers opportunity for above-average growth. Semiconductor companies focusing in this sector will have to step up their quality programmes to meet the more stringent automotive sector safety and compliance standards.”

 

Growth by region

Regional variations are expected to be significant over the next five years. Europe is expected to grow only 3.5%, due mostly to its slow economic recovery. South America is expected to play a more significant role in driving additional consumption in the Americas. In Asia, China will remain the leading semiconductor market regionally and globally. The semiconductor surge in Asia
will likely also be concentrated in Taiwan, South Korea and Singapore.

 

Growth by application

Data processing and communications are forecasted to continue to have profound impact on the semiconductor industry through 2017. Five core areas driving demand for semiconductors include:

 

  • Data processing: With total billings expected to rise from
    US$26 billion in 2012 to US$34 billion by 2017, tablets and notebook computers are
    anticipated to continue playing a meaningful role in advancing semiconductor
    sales in the data processing sector.
  • Communications: The continued adoption of smartphones and the roll out of high-speed broadband (4G and potentially 5G) should buoy semiconductor sales in developed markets. In emerging markets, however, the need for more basic smartphones may suppress requirements for semiconductors comparative to the more complex devices that are popular in developed markets.
  • Consumer electronics: The continuing popularity of smart TVs will likely boost semiconductor sales.
  • Automotive: Cars continue to rely on greater intelligence, connectivity and sophisticated electronics which are increasing
    the semiconductor content.
  • Industrial: Energy-related applications should accelerate use in the industrial sector, with growth between 6% and 12% from 2012 to 2017.

 

Notes to editors:

 

PwC helps organisations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with more than 180,000 people who are committed to delivering
quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.

 


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