How is Trillion Sensors by 2025 Panning Out?

From several literatures, talks in the semiconductor industry, forecasts, and BHAGs (Big Hairy Audacious Goals), specifically in the context of IoT (Internet of Things) and IoE (Internet of Everything), we have been looking forward to a world with over a trillion sensors around us. I recollect (produced below) from an impressive slide out of a presentation by Chris Wasden at 2014 MEC. Chris is the Executive Director, Sorenson Center for Discovery and Innovation at University of Utah.

This table shows the intensity of increase in the number of sensors to reach more than 1 trillion by 2025, decrease in the average unit price of a sensor, and yet increase in the total revenue from sensors. It’s impressive in the sense that it shows the best from all angles – increase in the number of sensors meaning a highly automated world, increase in the industry revenue meaning a healthy semiconductor (sensors) business, and drastic decrease in price per unit of sensor meaning a large worldwide society able to afford it and support the industry. Wow!!

How do we see that dream panning out today? Well, we seem to be doing fine in terms of number of units of sensors until 2015. It rose by 13% in 2014 and is expected to rise by 16% in 2015 to reach 12.9 billion, a figure above the one projected in the table. However, according to IC Insights’ forecast for five years, the unit volume growth of sensors is expected to rise at a CAGR of 11.4% and reach 19.1 billion by the end of 2019. That seems much below what is projected in the table even after a strong CAGR of 11.4%. Let’s look at the sales figures in terms of dollar revenue.

The IC Insights’ report on sensor shipments indicates that falling ASPs (Average Selling Prices) of sensors are impacting sales growth. True, the high volume markets like intelligent wearables, automated control systems, and mobile electronics etc. have boosted the requirements for sensors. However, the high-volume applications increased competition in the market and reduced the prices of sensors to a large extent, squeezing the profit margins of suppliers. That seems to dampen the spirit in sensor market. While sensor sales grew by a CAGR of 17.1% between 2009 and 2014 reaching a record high of $5.7 billion last year, it’s expected to rise by a CAGR of just 6% in next five years.

The acceleration & yaw sensors (i.e. accelerometers & gyroscopes), the largest category in terms of dollar sales volume (26% of total sensor/actuator market) had 4% drop in worldwide sales at $2.4 billion; in 2013 this category had dropped by 2%. In 2013, the magnetic-field sensor sales had dropped by 1%, but in 2014 it sharply rebounded by 11% growth reaching sales of $1.6 billion. The pressure sensor sales is continuing strength with 16% increase in 2013 and 15% increase in 2014 reaching a new high of $1.5 billion.

The MEMS-based sensors that include acceleration & yaw sensors, magnetic-field sensors and pressure sensors accounted for a major $7.4 billion of sales in 2014, i.e. 5% rise from $7 billion in 2013. It is expected to rise by 7% in 2015 to $7.9 billion and reach $9.8 billion by 2019, at a CAGR of 12%.

Looking at these actual figures in IC Insights report, they appear more or less in line with the projections in the trillion sensor slide as far as 2015 is considered. However, the projections in the slide for 2020 and beyond appear to be way off what we see on the ground in the IC Insights report. We need to watch the developments in the sensor business which is a key ingredient for the IoT landscape in the near future!