A new report by IHS Technology reveals small but significant gains made by industrial electronics semiconductors in the first quarter this year, confirming continued strength for a sector that was down just two years ago. The Industrial Semiconductor Market Tracker – Q2 2014 report was created by the Industrial, Security & Medical Service division of IHS Technology.
Revenue for industrial electronics chips rose 0.6 percent from the last quarter of 2013, with total receipts of $8.61 billion during the 2014 January to March period, which represents a robust increase of 17.5 percent from the first quarter of 2013. Though less than 1 percent, the expansion is significant as this growth was achieved during the first three months, traditionally the weakest time of the year.
At this pace of growth, industrial electronics semiconductors could finish 2014 with $35.42 billion in annual revenue, up 9.4 percent from $32.39 billion last year. This year could also turn out to be the strongest period in several years for the market, following the solid revenue growth of 8.8 percent in 2013 and after the unstable market conditions of 2012 that saw a debilitating 5.0 percent loss. Healthy projections ahead for this year also indicate that the recovery in 2013 wasn’t a fluke.
Robbie Galoso, principal analyst for industrial electronics at IHS comments that one is tempted to overlook the industrial portion of the overall semiconductor industry because it’s a workhorse segment often taken for granted. Given its performance, being second only to the mighty wireless space in revenue for the total semiconductor market, industrial electronics is a phenomenal powerhouse in its own right.
Q1 2014 highlights: winners and losers
Industrial segments that performed best in Q1 2014 included factory automation, commercial aircraft, LED lighting, climate control, renewable energy, medical electronics, application-specific testers and transportation, benefitting from a rapidly stabilising housing market, improved consumer finances, increased capital spending and better credit conditions.
Segments that did not do as well included homeland security, military aircraft, and general-purpose test and measurement, with a tighter U.S. defence budget responsible for military- and security-related declines, and test and measurement impacted by lengthening capital-approval cycles.
Top performing companies included Texas Instruments (motor drives in factory automation), Analog Devices Inc. (energy and military applications), Maxim Integrated (medical electronics), and Microsemi (electronic-oriented aircraft).
Companies negatively impacted during the quarter included Cree, Nichia and Philips Lumileds, all of which faced normal seasonal pressures in the LED lighting area. NXP and Xilinx also reported sales declines across a number of customer accounts.
Countries with the strongest presence or influence in semiconductor design for industrial electronics included United States, China, Japan and Germany, together accounting for 71 percent of chip-design influence. The top 10 also included India, while the top 20 overall drew heavy representation from Western Europe, including the likes of Switzerland, the United Kingdom and Italy.