Two markets - will industrial catch up in 2010?

I continue to hold the view that the supply chain is effectively two independent markets; one being largely driven by volume consumer items such as mobile phones and TVs. The other is the wider industrial sector.

The significance of the "two market" view is that while the mobile phone market is showing signs of recovering quickly from the downturn, the industrial market will take longer to pick-up.

Now I see some predictions from analyst IMS Research that sales of semiconductors in the industrial market could grow strongly next year driven by demand for home appliances.

This would be an encouraging prediction for much of the distribution supply chain which is dependent on industrial sales. 

This market has been hit hard in the downturn, and IMS Research predicts that major home appliance (MHA) shipments this year will be nearly 10% down from 2008.

This has resulted in a 15-20% fall in semiconductor sales in the industrial sector.

But a recovery is expected next year and IMS predicts five years of growth.

Positive factors at play here in the increased use of inverter-based variable speed control for motors, compressors, and pumps. This is being driven by an emphasis on energy efficiency and stricter appliance standards.

Another major factor contributing to more semiconductor use is the trend toward electronic controls and displays. Driving graphical UIs with complex menus and multiple languages requires the use of more advanced microcontrollers.

"This is contributing to 16 and 32-bit solutions taking share from 8-bit and 4-bit products. Displays and touch controls are being embraced by appliance makers as a way to differentiate their products from competitors and have become more enticing as component costs have come down and they become more familiar designing such systems in-house," said IMS Research.