November 14, 2012

IC Content per Television Increasing Even as TV Unit Growth Slows

Smart TVs, LED technology, emerging markets seen boosting IC market for TVs.

IC Insights will release its 2013 edition of IC Market Drivers—A Study of Emerging and Major End-Use Applications Fueling Demand for Integrated Circuits this November.  The study examines several key system applications including the market for digital televisions and its impact on the IC market.

Total worldwide shipments of digital and analog televisions are forecast to slow considerably in 2012, growing to 236 million units, which represents an increase of only 1.2% over 2011.  Digital televisions, which first surpassed CRT televisions in 2008, are forecast to represent 92% of new TV shipments this year, as seen in Figure 1.

Figure 1

The digital television upgrade cycle continues in full swing in emerging markets such as Brazil, Russia, India, and China, and that is helping offset slower growth in mature markets such as Japan, Western Europe, and North America where the upgrade to flat-panel digital televisions sets has largely taken place. Through 2016, TV shipments are forecast to grow to 269 million units, which represents a CAGR of 2.9% from 2011-2016.

Economic hardship is seen as one reason for the slow rate of growth for televisions in 2012, but perhaps more telling is that a younger, tech-savvy generation of consumers is choosing to watch TV when it wants via the Internet using the mobile device of their choice.  It is worth noting that for the first time in more than 20 years, the number of homes in the U.S. with television sets declined in 2011, according to data collected by the Nielson Company, which calculates television ratings for networks and advertisers.  More programming is being downloaded from the Internet and is watched on computers or other devices, and is one reason why “cord cutting,” where consumers drop cable to watch videos or TV shows on Hulu, Roku, or through their Xbox 360s, is accelerating, and cutting into the growth rate of TV unit shipments.

TV manufacturers are looking ahead to find the next big technology driver for TVs.  In the near-term, smart TVs represent a solid growth driver.  Just as smartphones brought the Internet and thousands of applications to cellphone users, smart TV is bringing Internet features to television by offering TV broadcasts, videos, movies, photos, and other content via the web and Cloud-based video on demand (VOD) services.  Smart TVs have evolved from simply having the ability to connect to the Internet and provide web browsing, to having the ability to download and run apps, to including sophisticated technologies and multiscreen interaction and using TVs in combination with handheld devices for a more interactive experience.  IC Insights estimates that smart TVs represented 28% of television shipments in 2012 and are forecast to account for 62% of TV shipments in 2016.

Adoption of technologies such as wireless video connections, networking interfaces, multi-format decoders and LED backlighting will help boost the average IC content in TV sets even as the growth rate for TV sets themselves slows through the forecast period.  The IC market for DTVs grew 12% to an estimated $13.4 billion in 2012, up from $12.0 billion in 2011.  IC Insights projects that total global IC revenue for televisions will grow 9% to $14.6 billion in 2013.

Further out, ultra-premium organic LED (OLED) TV sets could be the next big growth driver for the television industry.  Most consumers agree that OLED sets produce the most dazzling picture of all HDTV technologies on screens that can be made bigger, thinner, that draw less power and contain no bad metals, and can potentially be made flexible and/or transparent.  A few select manufacturers have demonstrated 60-inch OLED models, but these are priced around $10,000—far beyond what most consumers are currently willing to pay.

Report Details: IC Market Drivers 2013

IC Market Drivers 2013—A Study of Emerging and Major End-Use Applications Fueling Demand for Integrated Circuits examines the largest, existing system opportunities for ICs and evaluates the potential for new applications that are expected to help fuel the market for ICs.

IC Market Drivers is divided into two parts.  Part 1 provides a detailed forecast of the IC industry by system type, by region, and by IC product type through 2016.  In Part 2, the IC Market Drivers report examines and evaluates key existing and emerging end-use applications that will support and propel the IC industry through 2016.  Some of these applications include the automotive market, cellular phones (including smartphones), personal/mobile computing (including tablets and Ultrabooks), wireless networks, digital imaging, and a review of many applications to watch—those that may potentially provide significant opportunity for IC suppliers later this decade.  The 2013 IC Market Drivers report is priced at $3,190 for an individual-user license and $6,290 for a multi-user corporate license.