Although sensor shipments continue to rise worldwide, sales growth is being pulled down by price erosion throughout the market, according to a new report from industry researcher IC Insights.
Sensor demand continues to rise, thanks to designers’ pursuit of Internet of Things applications and wearable technologies. But such high-volume applications are driving down average selling prices for sensors at an accelerated pace, the researcher says.
Average selling prices (ASPs) for all types of semiconductor sensors are forecast to fall by a compound annual growth rate (CAGR) of -5% by 2019—double the rate of decline in the previous five years. At the same time, unit volume growth is expected to climb at a CAGR of 11.4% by 2019, reaching 19 billion sensor shipments worldwide, with revenue growth of 6%. In comparison, sensor sales grew by a CAGR of 17% between 2009 and 2014 to reach a new record high of $5.7 billion last year, according to IC Insights.
“ASP erosion is partly a result of intense competition among a growing number of sensor suppliers pursuing new portable, consumer, and IoT applications,” IC Insights says in its O-S-D Report—A Market Analysis and Forecast for Optoelectronics, Sensors/Actuators, and Discretes, released earlier this spring. “Sensor ASPs are also being driven much lower because many new high-volume applications require rock-bottom prices. The fall in prices is not only undermining revenue growth in the highly competitive sensor segment, but it is also now squeezing profit margins among suppliers.”
Semiconductor sensors make up nearly two-thirds of the total sensor/actuator market segment, according to IC Insights.
The IC Insights report follows earlier industry reports pointing to record growth in the sensor market over the next several years, as the technology becomes more affordable and consumer demand grows for more and more connected devices.