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Wearables, Infotainment, Fitness Drive Microprocessor Sales

Smart wearables, infotainments systems, and medical fitness devices are the high-growth potentials in the microprocessor market. The market which was initially dominated by PCs has been overtaken by smartphones. The emergence of artificial intelligence, demand for augmented reality and virtual reality is likely to create a niche high-growth opportunities in the microprocessor and GPU markets.

A microprocessor, or micro processing unit (MPU), is a device that carries out the core elements of a computer system on a single integrated system. Developments in semiconductor fabrication technology led to the evolution of microprocessors. The global microprocessor market was valued at USD 61.19 billion in 2016 and is expected to reach USD 66.93 billion by 2022, at a CAGR of 1.52% between 2017 and 2022.

A Graphics Processing Unit (GPU) is a specialized electronic circuit designed to accelerate the image output in a frame buffer intended for output to a display device. GPUs are primarily used for generating a three-dimensional (3D) output in computer games. Drawing a 3D scene is an intensive task and can put extra strain on the CPU. The market for GPUs is expected to be worth USD 16.77 billion by 2022, growing at a CAGR of 5.22% between 2017 and 2022.

The chart below shows the opportunities in terms of growth rate for the microprocessor market.

Figure: Opportunities in the next five years


Source: Industry Experts, Primary Interviews, Secondary Sources, & MarketsandMarkets Analysis

Source: Industry Experts, Primary Interviews, Secondary Sources, & MarketsandMarkets Analysis

The increasing use of electronics in automotive applications can generate huge market opportunities in the future. The growing adoption of advanced driver assistance systems (ADAS) and infotainment systems is the key driving factor for the microprocessor and GPU market in the automotive segment. Telematics, a branch of information technology that deals with the transmission of computerized information to car users, is now becoming a popular business tool, used by automobile manufacturers, that differentiates the product, price, and promotion of automobiles. Panasonic Automotive Systems (US) and Qualcomm Technologies will be working together on developing next-generation Android-based in-vehicle infotainment (IVI) system using a Qualcomm Snapdragon 820Am processor.

On March 13th 2017, Intel and Mobileye (Israel) entered into an agreement for the acquisition of Mobileye. Mobileye a technology company that develops vision-based advanced driver assistance systems (ADAS) to provide warnings for collision prevention and mitigation.

Medical is expected to be one of the key growing applications in the microprocessor market. Traditionally, in the healthcare sector, processor tasks were related to data electronic health records (EHR), personal monitoring devices, and mobile apps. Modern applications include the development of surgical robots that can assist during medical operations. The growing demand for portable and wearable devices, especially smartwatches, is expected to be one of the niche opportunities in the microprocessor market. The global smartwatch market is expected to grow at a double-digit compound annual growth rate (CAGR) between 2017 and 2022.

The transition from larger computing devices to portable devices is one of the factors inhibiting the growth of the microprocessor market. Due to the growing demand for portable devices, the market for ARM-based microprocessors is expected to grow at a higher rate than Intel x86 architecture. Companies such as Qualcomm (US), Samsung (South Korea), and MediaTek (Taiwan) are the key vendors in the ARM-based processor market. At CES 2017, Qualcomm Technologies and Osterhout Design Group (ODG) (US) announced that R-8 and R-9 devices will be powered by Qualcomm Snapdragon 835 processor. ODG is a leading developer and manufacturer of mobile head-worn computing and augmented reality technologies and products. R-8 and R-9 are consumer AR/VR smart glasses.

Image courtesy: Osterhout Design Group

Image courtesy: Osterhout Design Group

The artificial intelligence (AI) chipset market is expected to be worth USD 16 billion by 2022. The growing demand for AI chipsets is likely to impact the chip manufacturers, and they are expected to fulfill specific requirements. Server providers such as IBM (US), Dell (US), and HP (US) are expected to come up with advanced processor chips to enhance the AI experience. Intel (US) has identified the importance of the technology and offers end-to-end AI solutions and is striving to expand Intel architecture in the high-growth AI solutions. A GPU is likely to be key accelerator element in the AI solutions and would help in the faster processing. At the 2017 Open Compute Project US Summit, AMD announced its collaboration with Microsoft Corporation (US) to integrate the cloud delivery features of AMD's “Naples” x86 server processor with Microsoft's Project Olympus.

The virtual reality (VR) is also one of the key growth opportunities in the market. Intel Corporation (US) acquired the virtual reality (VR) start-up VOKE (US) to offer immersive sports experiences for athletes, fans, and content producers. Intel launched Xeon processor E3-1200 v6 product family. The Intel Xeon processor E3-1200 v6 product family enables entry-level workstations to evolve and expand to support new and powerful workloads, including professional virtual reality (VR), rendering, production and distribution, design, and analytics.

In the microprocessor and GPU markets, medical and automotive applications are expected to grow at a higher rate in coming years. The developments in the artificial intelligence and cognitive computing is expected to further push the market growth with niche and specific requirements. 

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