Price erosion negates sales growth to slow sensor market

The 2016 O-S-D Report shows worldwide dollar-volume revenues for sensors rising by a CAGR of 5.3% between 2015 and 2020 compared to an 8.9% annual rate in the last five years. In contrast, total sensor unit shipments are expected to climb by a CAGR of 12.4% in the five-year forecast period compared to a blistering 20.5% rate of increase in the 2010-2015 period, when new sensing, navigation, and automated embedded control functions in smartphones drove up strong growth along with steady increases in automotive and industrial applications.

Despite recent years of weak sales growth - just 1% in 2015 to $6.4bn - the sensor market is expected to end this decade with 10 consecutive years of record-high revenues and reach $8.3bn in 2020 (Figure 1). Unit shipments of sensors have reached record high levels each year since the beginning of the last decade - even in the 2009 downturn year, when worldwide unit volume grew 9% while sensor revenues dropped 3%. Record sensor shipments are expected to continue for another five years, reaching 28.9bn units in 2020, according to the 360-page 2016 O-S-D Report, which contains a detailed five-year forecast of sales, unit volume and ASPs for more than 30 individual product types and device categories in optoelectronics, sensors/actuators and discretes.

Figure 1 - sensor units climb as prices plunge

Competition between suppliers and requirements for low-cost sensors in new high-volume applications drove down ASPs from about $0.66 in 2010 to $0.40 in 2015. The need to squeeze more sensing solutions into wearable systems, far-flung IoT-connected applications and multi-sensor packages for increased accuracy and multi-dimensional measurements is exerting more pricing pressure in the market, concludes the 2016 O-S-D Report. The report’s forecast shows sensor ASPs dropping by a CAGR of  6.3% in the next five years to only $0.29.

Total sensor sales are expected to grow by about 3% in 2016 to $6.6bn with worldwide shipments rising 13% to nearly 18.2bn units this year. Sales of sensors made with MEMS technology (i.e., accelerometers, gyroscope devices and pressure sensors, including microphone chips) - are expected to grow by 4% in 2016 to $4.8bn with unit shipments increasing 10% to 7.6bn. The 2016 O-S-D Report projects MEMS-based sensor sales rising by a CAGR of 5.5% in the next five years to $6.1bn in 2020 with unit shipments growing by an annual rate of 11.9% to nearly 13.4bn. ASPs for MEMS-based sensors are expected to decline by a CAGR of -5.7% to $0.45 in 2020 from $0.61 in 2015, according to the annual O-S-D Report.