SAN FRANCISCO—Sales of semiconductors used in smart electricity meters are projected to grow to $1.1 billion in 2016 from $505.6 million in 2011, due to rapid growth expected for the devices, according to market research firm IHS iSuppli.
IHS projects that global shipments of smart meters will triple during the same period, reaching 62 million units in 2016. The firm cited the capability of smart meters to save energy and to improve the efficiency of electrical grids for the growth projection.
Jacobo Carrasco Heres, industrial electronics research analyst for IHS, said through a statement that the original incentive for utilities to replace conventional meters with smart meters was energy savings. "However, a more compelling incentive is the instrumentation of the grid," Heres said. "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."
Logic ICs—mainly metrology ICs and communications ICs—stand to benefit the most from the growth of smart meters, IHS said. The next biggest opportunity is for microcomponents such as microcontrollers, digital signal processors and microprocessors, the firm said.
Smart meters also are making greater use of SoCs, which will integrate most of the functionality of the product into a single device, IHS said.
Although both smart meter shipments and the market for smart meter semiconductors will continue to expand in the coming years, revenue in both areas will flatten starting in 2015, according to IHS.
The rollout of smart meters is being propelled by government support and regulations, IHS said. In the U.S., stimulus money from the Smart Grid Investment Grant 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, IHS said.
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, according to IHS.
One factor slowing market growth is a lack of money, IHS said. Amid current economic conditions, investments in smart grids and smart meters are falling short of expectations in many cases, according to IHS.
Consumer acceptance is another factor. The deployment of smart meters alone may not be sufficient to convince consumers that these devices are desirable, IHS said. 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, IHS said.
Combining smart meters with smart home features could represent a great opportunity for telecommunications companies, according to IHS. Sales of devices supporting these features will drive additional sales of semiconductors, the firm said.