Continuing strength in China and a resurgent U.S. economy are combining to drive accelerated growth in the worldwide market for semiconductors used in industrial applications this year, according to new research from IHS Technology. Global market revenue for industrial semiconductors is expected to rise by 12.9 percent in 2014, reaching $38.5 billion, up from $34.0 billion in 2013. This represents an even larger increase in market growth compared to an 11.4 percent expansion in 2013.
The United States and China, the world’s two largest markets for industrial semiconductors, are propelling global growth this year, with revenue increases of 13 percent and 17 percent, respectively. The two regions were responsible for strong market increases in the second quarter, compensating for a decline in Europe.
The surge in in the second quarter was thanks in particular to three sectors: factory automation; building and home control; and commercial aircraft. Expansion in the economies of the US and China overcame a contraction in the European market region during the April through June period. Following a seasonally slow first quarter, the strong second quarter expansion of nearly 7 percent kept the global market for industrial semiconductors on a strong ascendant path for the year.
“Rising demand for industrial semiconductors in the United States is being driven by a wide range of positive economic factors that are boosting the manufacturing sector,” said Robbie Galoso, principal analyst for IHS.
“At the same time, the Chinese government’s generous stimulus programs in several product markets are promoting broad-based strength for various industrial electronics areas. The robust performance in both countries kept spending on industrial semiconductors on track in the second quarter and set the stage for accelerated growth for the entire year of 2014.”
The growth in the U.S. is driven by a plethora of factors, including a more stable housing market, improved consumer finances, and credit and increased capital spending. This will cause annual growth in the U.S. industrial semiconductor market to rise by about 2 percentage points in 2014 compared to 2013.
With 30.5 percent of total revenue in 2013, the United States is the No. 1 purchaser of industrial semiconductors in the world and has market share dominance across several industrial markets.
Meanwhile for China, where economic growth is cooling, the impact of government stimulus programs is reverberating through the country’s various market segments. This is resulting in strong spending on microchips in industrial areas including manufacturing and process automation, test and measurement, building and home control, and security and video surveillance.
China is the second largest purchaser of industrial semiconductors in the world with 14.1 percent of total revenues in 2013.
Among the fastest growing product sectors within the industrial semiconductor market will be optical light-emitting diodes (LEDs), which will attain 12.4 percent growth. The use of LEDs for general-lighting applications is propelling expansion of this area. Demand for general-lighting LEDs is so strong that as lighting outperformed other applications like televisions, some LEDs originally intended for TVs are being sold to the general-lighting market.
Other fast-growing segments include transistors and thyristors, which will grow 14.2 percent this year.