The semiconductor sector is expected to benefit from the growth of wearable devices in the next few years, SinoPac Securities Investment Service (永豐投顧) said in a report on Tuesday.
Wearable devices are electronic gadgets that combine computing technology and built-in mobile Internet access with embedded sensors that can respond to the wearer’s movements.
As a result, the availability of various sensors will trigger demand of microelectromechanical systems (MEMS), thereby boosting the proportion of semiconductor components in such devices, SinoPac said.
In October last year, Gartner Inc said MEMS sensors and microcontroller units such as gyroscopes, accelerometers, electronic compasses and pressure sensors would become popular in mobile devices over the next few years, making them one of the major drivers of the global semiconductor industry.
While wearable devices have yet to mature or become a trend, analysts say more smart bracelets, watches and other products are likely to emerge in the next two years to drive growth in the wearable device segment, following in the footsteps of Google Glass, Samsung’s Galaxy Gear smartwatch and Nike’s FuelBand bracelet.
The Industrial Economics and Knowledge Research Center (IEK) has predicted the global market value of wearable devices could reach US$5.5 billion this year, up 83.3 percent from last year.
The figure is estimated to increase 72.7 percent to US$9.5 billion next year and expand another 68.4 percent to US$16 billion in 2016, the Taiwan-based researcher said. By 2018, the global market value of wearable devices is estimated to reach US$35 billion, it said.
Against this backdrop, the proportion of semiconductor components used in wearable devices is estimated to hit 18.3 percent in 2018 from 16.8 percent this year, SinoPac said in the report, citing IEK’s forecast.
The global market value of semiconductor components used in wearable devices will also expand at an annual composite growth rate of 53.2 percent to US$6.41 billion in 2018 from US$920 million this year, the report said.
SinoPac said companies in Taiwan’s semiconductor sector such as wafer foundries and chip packagers were likely to secure outsourcing orders from global integrated device manufacturers in the international MEMS supply chain.
Taiwan Semiconductor Manufacturing Co (台積電), the world’s largest contract chipmaker, Avanced Semiconductor Engineering Inc (ASE, 日月光), the world’s largest chip packaging and testing company, IC testing service provider King Yuan Electronics Co (京元電) and memorychip testing service firm Lingsen Precision Industries Ltd (菱生) are likely to enjoy technological and cost advantages over their domestic peers in the coming years, SinoPac said.
Shares of TSMC closed out the year at NT$105.50 on Tuesday, up 8.76 percent for the whole of last year, while ASE finished the year up 9.92 percent at NT$27.7, according to the Taiwan Stock Exchange’s data. King Yuan rose 10.54 percent over the last 12 months at NT$20.45 and Lingsen moved up 6.6 percent to NT$16.15, the exchange’s data showed.