This will provide opportunities for ICs. Global revenues for semiconductors used in water, gas and electric meters reached $1.2 billion in 2014, with a year-over-year growth of 11 percent and a five-year compound annual growth rate of 8 percent, the market research firm claims. The average cost of chips used in two-way meters was approximately $11 in 2014, IHS estimates. About two thirds of that semiconductor revenue comes from microcontroller and analog components, said IHS.
Unusually, even though volumes and competition will increase over time, average selling prices (ASPs) are expected to increase rather than fall. This is because the industry will be transitioning from low-cost 8-bit microcontrollers to more expensive 32-bit MCUs with additional memory requirements and system-on-chip components with increased security.
"The semiconductor industry for electric meters is moving toward a single-chip solution for measuring and communicating with the grid station, which is an important industry trend to watch," said Robbie Galoso, an analyst with IHS Technology, in a statement. "Water and gas meters require fewer semiconductor components; however, they need extra semiconductors for sensing and battery management."
Meters are evolving from those that merely register end-user usage, into systems that can be queried for on-demand data, upgraded remotely, shut off in case of emergency or non-payment and used for variable pricing.
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