Smart meters to boost IC sales

IHS Inc. has released the details of its research that describes a vibrant forecast for ICs used in smart meters. According to the market intelligence firm, power utilities are seen to adopt smart electricity meters due to their capacity to improve electrical grids efficiency and to save energy. As such, global smart meter shipments will top 62 million units in 2016, up from 20.5 million this year.

With global shipments forecast to triple in five years and spurring the doubling of the associated semiconductor market during the same period, worldwide sales of semiconductors used in smart meters are projected to grow to $1.1 billion in 2016, up from $505.6 million this year.


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“The original motivation for replacing conventional meters with smart meters was energy savings,” noted Jacobo Carrasco Heres, industrial electronics research analyst for IHS. “However, a more compelling incentive is the instrumentation of the grid. With the use of smart meters, utilities finally will have a well-mapped grid that will enable them to plan electrical generation and manage their resources more efficiently.”

The rollout of smart meters is being propelled by government support and regulations. For example, in the U.S., stimulus money from the Smart Grid Investment Grant (SGIG) program is driving the replacement of conventional meters with new smart models. Meanwhile, the European Union is targeting an 80 percent conversion to smart meters by 2020, representing shipments of 180 million units.

Despite these efforts and the rapid growth of smart meter shipments in the coming years, deployments actually are progressing more slowly than had been expected from a few years ago. One factor slowing market growth is a lack of money. Amid current economic conditions, investments in smart grids and smart meters are falling short of expectations in many cases.

Another factor is consumer acceptance. The deployment of smart meters alone may not be sufficient to convince consumers that the devices are desirable. Instead, smart meters should be paired with services that deliver more value to consumers, such as a dashboard that shows the electricity consumption of appliances and other devices. Combining smart meters with smart home features could represent a great opportunity for telecommunications companies. Sales of devices supporting these features will drive additional sales of semiconductors.

The thriving smart meter market will drive the rise of a large associated semiconductor business, with logic ICs—mainly metrology ICs and communications ICs—contributing most to the cost of smart meters. The next biggest contributors are microcomponents such as MCUs, DSPs and microprocessors, IHS stated.

Smart meters also are making greater use of SOC devices that will integrate most of the functionality of the product into a single device. Revenue in both areas, however, will flatten starting 2015, predicted IHS.