The Internet of Things: Sizing up the opportunity
This connectivity trend is now recognized as a source of growth for semiconductor players and their customers.
Global Institute research supports that belief, estimating that the impact of the Internet of Things on the global economy might be as high as $6.2 trillion by 2025.
Analysts have predicted that the installed base for Internet of Things devices will grow from around 10 billion connected devices today to as many as 30 billion devices by 2020—an uptick of about 3 billion new devices per year (exhibit). Each of these devices will require, at a minimum, a microcontroller to add intelligence to the device, one or more sensors to allow for data collection, one or more chips to allow for connectivity and data transmission, and a memory component.
A new class of components will be required to address this opportunity: system on a chip–based devices produced specifically for the Internet of Things, with optimal power and connectivity features and with sensor integration.
Additionally, sensors based on microelectro-mechanical-systems (MEMS) technology will continue to play a significant role in enabling Internet of Things applications.
And security and privacy issues absolutely must be addressed. Internet of Things devices will not be used for critical tasks in, say, industrial or medical environments if connectivity protocols have not been established to prevent hacking, loss of intellectual property, or other potential breaches.
Given the potential 90 percent distribution of value to players that provide all the technologies “beyond” the silicon, there may never be a compelling enough business case for components manufacturers to develop individual chips and systems for hundreds of thousands of discrete Internet of Things industry applications. We believe semiconductor players should instead design a family of devices that are sufficiently flexible to cater to the needs of multiple industries—that can be used in industrial and consumer Internet of Things applications that boast similar characteristics.
Prospective IoT semis that are not mega cap: ARM (acquired by Softbank), NXPI (to be acquired by QCOM), SWKS, SYNA, STM, MCHP, TXN, CY
Since 90% is beyond silicon, should overweigh (90% of portfolio) SHOP, VEEV, NTNX, UBNT, IRBT, SPLK and PANW and about 10% on semi