Internet of Things: Opportunities and challenges for semiconductor companies

The nascent Internet of Things could open vast opportunities to semiconductor companies—provided that they prepare now.

by Harald Bauer, Mark Patel, and Jan Veira (McKinsey)

The Internet of Things (IoT) has generated excitement for a few years now, with start-ups and established businesses placing bets on the industry’s growth. Some of the earliest investments have begun to pay off, with smart thermostats, wearable fitness devices, and other innovations becoming mainstream. With new IoT products under development or recently launched—ranging from medical-monitoring systems to sensors for cars—some analysts believe that the Internet of Things is poised for even greater gains.

Semiconductor companies, perhaps even more than other industry players, might benefit from the IoT’s expansion. With growth rates for the smartphone market leveling off, the Internet of Things could serve as an important new source of revenue. Given the size of the potential opportunity, McKinsey recently collaborated with the Global Semiconductor Alliance (GSA) to investigate the Internet of Things more closely, with a focus on risks that could derail progress.

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