The IoT semiconductor industry is in continually high demand, especially as people look for increasingly advanced and feature-filled connected devices. However, the specific reasons for the chip’s rise are more complex than some might think. Here’s a closer look at some of them.
1. The Chip Shortage Hinders IoT Production and Development
A recent survey of global IoT developers showed that most face significant challenges. More than eight in 10 respondents said they must rapidly manufacture new products and services to keep or grow their current market positions. However, doing that isn’t as straightforward as they might hope.
That’s because 61% of respondents said the semiconductor shortage had restricted their ability to deliver new products to customers. The supply chain troubles negatively impact developers, too. Respondents said developers had to adapt their firmware and digital products to make them work with whatever chips were available. Doing so put more pressure on already-strained team members.
More than 90% of decision-makers at IoT companies said they worried about the well-being of their developers. Digital product development is increasingly complex, and developers themselves are in short supply.
A 2021 IoT market research report showed that the sector grew 22.4% that year, reaching $158 billion. However, analysts confirmed that supply chain issues and the labor shortage prevented maximum growth potential during the year. Researchers expected the market to reach a compound annual growth rate of 22% to $525 billion from 2022 until 2027. However, that was adjusted down from previous forecasts due to the previously described challenges.
2. The Widespread Use of IoT Devices Has Increased Security Concerns
People used more than 10 billion IoT devices in 2021, and that number could rise to 25.4 billion by 2030. The popularity of IoT products has changed how and why people use technology. However, it has also dramatically broadened the attack surface for cybercriminals to target.
Succeeding in IoT semiconductor manufacturing means adhering to tight quality control measures to avoid unwanted outcomes. For example, inaccurate cutting during silicon wafer dicing lowers process yields. However, maintaining high-quality production also means taking precautions to prevent security issues at the chip level and elsewhere in the IoT product.
Counterfeit chips are among the often-discussed risks. One study found that 55% of integrated circuit manufacturers had found counterfeit versions of their products. Government authorities have also warned that fake chips could pose national security threats. Even if the ramifications aren’t that severe, cybercriminals might alter counterfeit IoT semiconductors to put malware on them. That’s not just a far-fetched idea, either.
One report showed a 71% jump in the attack rate for IoT malware in health care during 2021. Across all sectors, there was a 4% drop in such malware deployment. However, researchers said the future might show a strong rebound in such attacks. Cybersecurity researchers also recently highlighted a proof of concept for IoT malware. They said it could move laterally across an IoT network after infection and compromise the OT infrastructure.
When people think about how to secure devices, they must also consider the IoT semiconductor as a possible risk element. Moreover, manufacturers must keep doing what they can so chips and gadgets are as resilient as possible against attacks. Security should be a top-of-mind concern from the start rather than an afterthought.
3. The IoT Semiconductor Causes Shifts in the Tech Landscape
As IoT devices become more widely available and affordable, people naturally start to prefer them over less-advanced or more traditional options. Sales of smartphones in 2020 dropped by 12.5%. Relatedly, new phones are not as in demand as they once were, suggesting people are holding onto their old ones for longer and not feeling pressured to buy the latest releases.
One reason for the decline could be that people have easy access to IoT devices that do everything phones can and more. Smart speaker revenue reached $4.4 billion in 2017 and was expected to reach $17.4 billion in 2022. Such growth requires IoT semiconductor production. When people continue preferring to buy connected gadgets, the components that make them work become more in demand, too.
However, the previously mentioned chip shortage may not be a wholly bad thing. One possibility is that the creativity necessitated by the lack of semiconductors could lead to hardware innovations that would not have happened so quickly otherwise.
Some IoT designers are already making changes to integrate more functions into newer, specialized chips. Others are looking at options that would let them stop using the hardest-to-source parts altogether or make software alterations that can handle some functionality normally reserved for hardware.
Tech manufacturers must constantly assess customer trends and adapt accordingly. The demand for the IoT semiconductor makes that even more necessary. The average consumer won’t know or care about what happens under the hood to make their connected devices work. They’re happy as long as they function as expected. However, manufacturers must operate within the parameters set by the components they can reliably source.
4. Educational Curriculums Have Changed to Stay Current
People with semiconductor-related skills are in tremendous demand, and the IoT is a key driver of that labor market need. There was a 78% rise in job postings for electrical engineers in the semiconductor industry between 2020 and 2021. As of March 2022, Intel had more than 2,500 open positions for engineers in the U.S.
The people overseeing the curriculums for tech-related degrees have changed course content to reflect the growing need for and usage of IoT devices. Even some self-guided courses occurring solely online typically cover IoT products and how they affect the skills people need to succeed in the industry.
Representatives from many well-known semiconductor brands also understandably want to minimize the time frame for when a person receives the education they need to work in the industry and when they get hired for their first role. That’s why people from semiconductor companies often partner with educational institutions and directly influence the learning content. Some schools even have labs and equipment sponsored by manufacturers.
Students that get that ongoing exposure during their university years become well-equipped to go straight into roles at semiconductor factories when they graduate. Many initially take paid internships and eventually progress to full-time positions once they prove they have what it takes to work in the field.
The IoT Semiconductor Will Keep Gaining Ground
People can’t thoroughly discuss the semiconductor industry without also talking about how IoT products influence it. These links will undoubtedly remain for the foreseeable future, especially as connected devices become even more widely used and highly functional.
