ARM at the heart of the IIoT

Semicast has covered the market for industrial electronics and semiconductors since 2006 and views the sector as a series of markets within a market, each with its own trends and suppliers. This arguably makes it the most complex sector for electronics and semiconductor vendors to understand and support. Semicast defines the industrial electronics market to include traditional areas such as factory automation, motor drives, lighting, building automation, surveillance, test & measurement and power & energy, as well as medical and industrial transportation equipment such as construction and mining; aerospace & defence is excluded.

It is Semicast’s view that the IIoT can be broadly described as intelligence and connectivity being added to ever smaller, distributed, remote industrial devices. This includes obscure, somewhat dull products, such as pressure measurement, proximity sensors and motion detectors, which offer none of the glamour and allure of smart watches or wearables, but which nonetheless are manufactured in volumes of tens of millions of units per year.

Unlike wearables and other “smart things”, demand for these devices is established and their market sizes known; the trend of IIoT is for more of them to be intelligent and connected. This intelligence and connectivity increasingly comes from the addition of sub-$1 32-bit MCUs, together with wireless communications such as 6LoWPAN, Bluetooth/BLE, LoRa, NFC, Sub-1/2.4GHz, WiFi and ZigBee.

Colin Barnden, Principal Analyst, Semicast Research, and study author, commented: “These intelligent, connected, industrial devices generate the Little Data which has never previously been captured, to be processed locally or fed straight to the Cloud for Big Data analytics, thus creating the IIoT of smart buildings, cities, factories, grid, medical, payment and security.”

UK-based ARM Holdings (ARM) dominates the technology and intelligence powering the IIoT and its leadership in this market helps explain Softbank’s announcement to buy ARM for $32bn on 18th July. Using data from Semicast’s 2016 Industrial/Medical Electronics & Semiconductors Service, ARM’s market share for 32-bit MCUs in industrial and medical applications is estimated at about 80% when measured in units, while for MPUs it is about 50%. Intel currently dominates Big Data processing at the core of the IIoT, but ARM is steadily building its share in the Little Data analytics at the network edge.

“Softbank’s purchase of ARM seems a little like buying ExxonMobil to fill your gas tank. Only time will tell if this was a smart move by Softbank, but at a premium of more than 40% of the previous closing price, ARM’s shareholders will be celebrating already,” summarised Barnden.