Gearing Up for IoT: Semiconductors and Sensors

May 4, 2017
With more than 6 billion connecting “things” currently in use, a new report says that number will skyrocket to 20.8 billion by 2020.

Defined as the concept of connecting any device with an on and off switch to the Internet (and/or to each other), the Internet of Things (or, “IoT”) is pushing more electronics manufacturers to think about how their coffee makers, refrigerators, mobile devices, and wearable devices will eventually connect to one another. With Gartner predicting that 6.4 billion connecting “things” are currently in use—up 30 percent from 2015—the research firm says that number will skyrocket to 20.8 billion by 2020. This year, for example, we’re already seeing 5.5 million new things connected every day, according to Gartner.

Gartner estimates that IoT supports total services spending of $235 billion in 2016, up 22 percent from 2015. Services are dominated by the professional category (in which businesses contract with external providers in order to design, install, and operate IoT systems), however connectivity services (through communications service providers) and consumer services will grow at a faster pace.

"IoT services are the real driver of value in IoT, and increasing attention is being focused on new services by end-user organisations and vendors," says Jim Tully, vice president and distinguished analyst at Gartner. “Aside from connected cars, consumer uses will continue to account for the greatest number of connected things, while enterprise will account for the largest spending.”

Assessing the Semiconductor

According to McKinsey, the semiconductor industry is poised to benefit from the IoT’s growth over the coming years. In The Internet of Things: Sizing Up the Opportunity, the research firm points to one of the best-known applications of IoT as the area of energy optimization (i.e., sensors deployed across the electricity grid can help utilities remotely monitor energy usage and adjust generation and distribution flows to account for peak times and downtimes).

But applications are also being introduced in a number of other industries. Some insurance companies, for example, now offer plans that require drivers to install a sensor in their cars, allowing insurers to base premiums on actual driving behavior rather than projections. And physicians can use the information collected from wireless sensors in their patients’ homes to improve their management of chronic diseases.

“Through continuous monitoring rather than periodic testing, physicians could reduce their treatment costs by between 10 and 20%,” according to McKinsey Global Institute research, “and billions of dollars could be saved in the care of congestive heart failure alone.”

In each of these cases, McKinsey states that the connected devices that transmit information across the relevant networks rely on innovations from semiconductor players—highly integrated microchip designs, for instance, and very low-power functions in certain applications.

“The semiconductor companies that can effectively deliver these and other innovations to original-equipment manufacturers, original-device manufacturers, and others that are building IoT products and applications will play an important role in the development of the market,” the firm concludes. “That market, in turn, may represent a significant growth opportunity for semiconductor players.”

The Sensor’s Role in the IoT

Sensors will also play a critical role in the ongoing development and advancement of IoT technologies. In Sensors Are Essential To Be IIoT- and IoT-Competitive, Machine Design contributing expert Bradford Goldense discusses how sensors of all types and sizes will be needed to generate the source data upon which the IoT’s intelligence will largely be built. Companies that make the most progress in the next 10 years in embedding and augmenting their hardware and electronics with data gathering and generating capabilities, Goldense writes, will likely be the market leaders in the following decade.

To “sensorize” their products, companies can surround their products with third-party sensing capabilities; retrofit products through value engineering and sustaining activities; or modify their product architecture today so that all new products will be “IIoT-ready” at launch, according to Goldense, noting that the existing IoT technologies represent just 1/10th of what is coming down the road.

“Unless companies get in front of this, they will experience a slew of engineering change orders starting in a few years as customers force companies to sensorize their products,” Goldense writes. “The room to skate around that issue exists today, but will soon be gone.”

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