We all have witnessed the depressing news flow about slowing smartphone and tablet sales growth over the past 12 months. But this week, Semiconductor Industry Association threw a curve ball by announcing that chip sales actually increased by a surprisingly robust 11% in the first half of 2014 compared the same period in 2013. SIA is actually hiking its annual growth estimate to 6.5% from earlier projection of 4.1% growth. How can chip sales growth be accelerating if phone and tablet markets are mediocre?
Interestingly, one reason cited by SIA for increasing chip sales is strengthening computer sales. 18 months ago, the computer market was written off by many as a moribund dinosaur fatally wounded by dynamic smartphone and tablet segments. But a weird thing happened – tablet sales growth cooled down drastically from 60% in 2013 to just little over 10% in the spring of 2014.
At the same time, the computer market has found a second wind as a new generation of cheap and powerful laptops lured some consumers back to upgrading. We are not talking about a huge revival — Gartner is now pegging computer sales growth at 0.1%. But after two years of declines, even 0.1% growth can come as considerable relief for PC OEMs.
Another reason for strong chip sales is the Internet of things. As cars and medical devices grow smarter and demand more and pricier semiconductor components, some rudimentary intelligence is starting to pop up in a startling range of formerly dumb objects, from lightbulbs to coffee makers. Kickstarter is one barometer of this trend and it is now bursting with projects making objects smarter.
Despite widespread skepticism, the smartwatch wave keeps on building. One of the most fascinating new ideas is Moment, the “world’s first wraparound smartwatch.” The massive, curved display of Moment has lured nearly $500,000 in donations for the project. Getting even odder, The Hug makes your water bottle smart and helps you monitor hydration levels by measuring how much liquid you are ingesting.
It remains to be seen how many consumers actually need a 360 degree display around their wrist, let alone an intelligent water bottle. But for the time being, the internet of things is helping goose chip sales in the more boring formats like cars and heart rate monitors.
