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Industrial Electronics Turns Around in 2013 with Double-Digit Growth

28 January 2014

The global market for industrial electronics semiconductors ended 2013 on an upbeat note, with overall revenue up convincingly from the previous year and reversing the disappointing decline of 2012, according to a new report from IHS Inc.

Industrial electronics chip revenue for 2013 amounted to $33.7 billion, a solid 11 percent rise from $30.4 billion in 2012. The double-digit increase expected in 2013—once final figures are confirmed for the fourth quarter—will show that the market recovered nicely from the 5 percent loss of 2012.

Industrial electronics on the whole will keep growing for the next few years. By 2018, chip revenue will reach some $45.0 billion, as shown in the figure below.

Global revenue forecast for industrial electronics semiconductorsGlobal revenue forecast for industrial electronics semiconductors

The market’s bounce-back is due to a strengthening global economy, coupled with higher purchasing confidence across all geographical regions.

In the Americas, for instance, led by the U.S., an upturn in the housing market fueled expansion in the building and home control segment of the industrial electronics space.

China was another locus of growth, with broad-based revenue increases occurring in various industrial electronics segments, including medical electronics and factory automation.

Even a beleaguered Europe, still disentangling itself from the recent financial turmoil, was a happy contributor, with 13 of its countries figuring among the Top 20 global markets for industrial electronics. Those nations included the likes of Germany, France, Switzerland, Sweden, Italy and Finland.

The market continued to improve during the third quarter last year, the latest time for which full numbers are available, when it picked up at least 5 percent growth. Demand had started improving in the second quarter and then continued into the third, and the final quarter of 2013 will also show stability when results are brought in, IHS believes.

Such positive performance by the industry sets the stage for a robust 2014, with annual revenue forecast to grow 9 percent to $36.8 billion.

Powerhouse segments pull up weaker performers

The largest segment in all of industrial electronics during 2013 was building and home control, spurred by a newly resurgent U.S. residential market. Revenue in 2013 is estimated at $10.1 billion, or nearly a third of the industry’s entire takings. Lighting was a prominent performer, especially in the light-emitting diode (LED) sector, as were security systems used in applications like video surveillance and fire alarms.

Also obtaining high marks last year for growth were the military and civil aerospace segment, as well as medical electronics. In the former, a robust commercial avionics sector drove growth that compensated for headwinds encountered in the military sphere because of the U.S. federal budget sequestration. In the latter, the diagnostic-therapy-patient monitor market continued to grow while medical imaging remained stable.

One other important segment last year in industrial electronics was energy generation and distribution, even though performance as of the third quarter was mixed. Here weakness in wind turbines dragged down the stable growth seen in other renewable-energy sectors such as nuclear, thermal, hydro, and oil and gas.

Other segments contributing to industrial electronics were test and measurement, still soft in the third quarter; and manufacturing-process automation, which enjoyed enhanced results due to a significant increase in demand from China and the U.S.

The Top 5 countries last year in terms of semiconductor design and influence for industrial electronics were the United States, China, Japan, Germany and France. Together the five nations controlled more than 70 percent of the industrial electronics sphere in 2013.



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