Semicon market will significantly grow along with IoT

BANGALORE, INDIA: Semiconductor companies need to diversify their sales strategy to focus on the large number of smaller organizations that offer fast and stable growth, rather than relying on big deals from large customers that are in a constant state of flux, according to Gartner, Inc.

Startups and small electronics companies spent $78.3 billion on semiconductors in 2014, representing 23 percent of the total semiconductor market.

Gartner estimates there are more than 165,000 companies that buy semiconductor chips around the world: The top 10 spend nearly 40 percent of the total semiconductor revenue; the top 11 to 100 spend about 30 percent; and the remainder spend 30 percent.

Despite the top 10 accounting for such a large percentage of the market, some of the largest customers have decreased orders in the past five years, challenging the semiconductor vendors that mainly supplied to them.

While Samsung and Apple have significantly increased orders in the same period due to success in the smartphone market, semiconductor vendors are concerned about the risk of relying on large customers such as these.

China is the fastest-growing among the major small-customer regions, with spending by these organizations on semiconductors growing from US$7.5 billion in 2007 to US$14.9 billion in 2014; growth in the smartphone and media tablet markets has been strong. In the Americas, EMEA and Japan, revenue from each customer is small, but the total market size of small customers is big due to the large number of such customers.

Gartner maintains that the number of customers will significantly increase after 2017, due to future growth of the electronics market and the increase in the number of Internet of Things solutions.