The connected home is one of the hottest topics being discussed today, and with CES 2015 taking place next month in Las Vegas, Nevada, new innovations are sure to be on display. Although the drive to create a smarter and more efficient home increases daily, driven by mobile devices interacting with numerous connected objects and devices, Hendrik Bartel, research director at Gartner, said connected home devices currently only appeal to a niche section of the high-income market.
Connected home devices include home automation devices such as smart thermostats and wifi-enabled lightbulbs, home monitoring devices such as a connected security camera that broadcasts to a person’s device and home security devices such as a security camera that connects to a central monitoring station.
Bartel provided his thoughts on what to expect from the connected home market, including which segments show promise for strong growth in the near future.
Q: Over the past couple of years we have seen numerous connected home devices arrive on the market. However, the reality is that this is currently a nascent market and companies are struggling with how to popularize their products and the associated benefits. With so much innovation in the market, why has it not taken off and what needs to be done to spur more growth?
A: Gartner’s recent survey of 6,500 consumers in the U.S. and Germany showed 16% of U.S. online households own a connected home device, whereas Germany has less than 10% of online households with a connected home device. An additional 4% of U.S. participants reported owning at least two or more devices which makes the total number of online households with one or multiple home automation devices is less than 25 million households in the U.S.Ownership of multiple connected home devices within a household in Germany is even less popular, where the results indicate that only 3% of respondents report owning two or more connected home devices.
One theory behind these numbers is that the current generation of devices is perceived as adding very little value beyond simply being a “gimmick.” Perhaps the first attempt has fallen flat in terms of promoting the value of enhanced energy savings or automation of repetitive tasks, as it would appear to be unable to convince the larger market to take advantage of the connected home.
Promoting a higher perceived value of connected home devices is necessary for additional growth. The current value propositions are too vague and not enticing enough to capture the small segment of high earners to achieve broader market penetration. Another option is to offer discounts for purchasing multiple devices. This would have the added benefit of gaining customer loyalty as well as getting more devices into the household. It’s also imperative to ensure that the home automation device offered easily integrates with existing controller devices (smartphone, tablet, laptop, etc.) and any other connected home devices already installed in the home.
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Semiconductor Manufacturing International Corporation (SMIC) has begun operations at its Shenzhen 200 mm wafer fab. This fab is the first 8-inch production line to be put into operation in Southern China, and is also the first domestic IC production line to be launched after the “National Outline of Promoting the Development of IC Industry” was issued this year.
The current growth of mobile communication devices and new applications such as IoT has created a large market demand that existing 8-inch capacity cannot meet. SMIC’s investment in the Shenzhen fab’s equipment and technology addresses this capacity shortage and further ensures that advanced international 8-inch wafer manufacturing requirements are met.
According to the plan, by end of this year, the fab will reach an installed capacity of 10,000 wafers per month; by end of 2015 it will reach 20,000 wafers per month, and will continue to expand its capacity to meet the growing demand. The wafer production will mainly be applied to image sensors, logic circuits, power management IC and other consumer and communication electronics.
Shenzhen has China’s largest electronic information industry base, drawing on hundreds of IC design houses and ODM/OEMs, and the local industry makes up over 30% of China’s IC sales revenue. However, the Shenzhen area is still weak in IC manufacturing. The existing IC manufacturing base cannot keep up with the market demand due to a limited number of manufacturing companies in the area and a lack of 8-inch (or larger) wafer manufacturing capabilities. SMIC’s new 8-inch fab will help bridge this gap in Shenzhen’s IC industry supply chain and fill the void for an 8-inch production line and above in Southern China. Shenzhen’s existing abundance of upstream and downstream IC enterprises provides SMIC with a geographic advantage to establish closer links with clients and manufacturers, as well as offer more convenient and efficient services to help customers reduce time to market.
Dr. Tzu-Yin Chiu, SMIC’s CEO and executive director, attended the commissioning ceremony and said, “Shenzhen is a place of strategic importance for China’s IC industry, as the leader of domestic IC manufacturing enterprises. SMIC’s arrival will play an important role in completing Shenzhen’s semiconductor industry chain. However, our Shenzhen fab will also further strengthen SMIC’s capacity and strategic outlook. We look forward to cooperating with local upstream and downstream industry chain enterprises and complement each other’s advantages to maximize the benefits available.”
SMIC is one of the leading semiconductor foundries in the world and the largest and most advanced foundry in mainland China. SMIC provides integrated circuit (IC) foundry and technology services at 0.35-micron to 28-nanometer. Headquartered in Shanghai, China, SMIC has a 300mm wafer fabrication facility (fab) and a 200 mm mega-fab in Shanghai; a 300 mm mega-fab in Beijing and a majority owned 300mm fab for advance nodes under development; and a 200 mm fab in Tianjin and Shenzhen. SMIC also has marketing and customer service offices in the U.S., Europe, Japan, and Taiwan, and a representative office in Hong Kong. For more information, visit www.smics.com.
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