The electronics sector mostly produces consumer electronics, electronic equipment, and manufactures electrical components for a variety of products. Consumer electronics are a key component in the electronics industry and for good reason. According to Precedence Research's 2022 market report, the global market for consumer electronics is predicted to grow at a compound annual growth rate (CAGR) of about 5.1% from 2022 to 2030, exceeding $1 trillion.
A few main drivers of future consumer electronics growth include smartphones' latest innovations, smart wearables, smart devices and equipment, artificial intelligence, automotive technology, and any equipment Internet of Things related (IoT), as well as the replacement cycles and dropping prices of many electronics devices to encourage continued consumption.
- While the electronics sector is divided between consumer electronics, electronic equipment, and electrical components, it's consumer electronics are key to the sector's growth.
- Because of the development of new technology, consumer electronics has evolved and intersects with multiple industries and sectors, including software, app development, robotics, artificial intelligence, and personalized healthcare.
- Within the consumer electronics sector, companies that focus on emerging technology are driving significant growth and include manufacturers of smartwatches, smart home products, and smart speakers.
Predictions from Consumer Technology Association (CTA)
The Consumer Technology Association (CTA) is the leading voice in consumer electronics and technology sector forecasting. The CTA represents more than 1,500 technology companies. Originally named the Consumer Electronics Association (CEA), the association changed its name in 2015—substituting "electronics" with "technology"—to reflect how the electronics sector has evolved to intersect with multiple industry sectors, including software, app development, robotics, artificial intelligence (AI), streaming services, personalized health care, and more.
In January 2022, the CTA predicted U.S. consumer technology retail revenue would reach a record $505 billion, a 2.8% year-over-year (YOY) growth compared to 2021. This included sales from both standard consumer electronics revenue powerhouses—such as smartphones, wearable tech, and smart homes—along with revenue from emerging technologies, like connected fitness equipment, and streaming services, particularly in gaming. However, due to supply chain challenges, by July, the CTA updated their revenue prediction to $503 billion, down 1% but still above pre-pandemic figures.
The Impact of Emerging Technologies on the Electronics Sector
Product differentiation and development of emerging technologies is a significant driver of change in the electronics sector. In addition to artificial intelligence, other products adding to the continued growth include wearables (e.g., smartwatches), smart home, automotive automation, connectivity technology/smartphones, and health and fitness technology.
Smart Home Products
According to CTA, consumer demand for smart home products is on the rise. These products address concerns people have for home security and safety. The niche includes a growing number of products, such as smart locks, doorbells, and cameras; smart smoke/carbon monoxide detectors; and smart thermostats, switches, dimmers, and outlets. In July 2022, the CTA predicted hardware revenue will increase by 3% to about $23 billion by end of year.
The number of home robots that help with household chores—such as vacuuming and floor cleaning—that consumers are projected to buy in 2019.
Two of the dominant products in the voice-controlled smart speaker niche—Google Home and Amazon Echo—are projected to rake in $4.2 billion in revenue in 2020, a 5% year-over-year growth. The two companies are projected to sell 9 million units as consumers continue to discover the benefits of voice-controlled technology.
Consumers can expect to see more sophisticated smartwatches as manufacturers look to expand beyond basic trackers and time keepers in favor of advanced features. This shift is projected to boost revenue to $7.1 billion in this consumer electronics niche, a healthy 8% increase from 2021.
The drone market is expected to see modest but steady growth in 2019. Sales are projected to grow by 4% to just over $1 billion, while units sold should also increase by 4% for a total of 3.4 million units sold for the year.
Less well known than consumer electronics is the semiconductor industry, which is also part of the electronics sector. The Semiconductor Applications Forecaster from International Data Corporation (IDC) shows an expected decline to $440 billion in 2019, down 7.2% from $474 billion in 2018. This comes on the heels of three consecutive years of semiconductor growth, with year-over-year growth of 13.2% in 2018.
One of the driving forces for this decline was the strong demand of the previous years, which led to manufacturers ramping up semiconductor production and thus causing an oversupply. The forecast for 2020, however, projects this supply-demand imbalance will be short-lived. IDC expects semiconductor growth rates will rebound in 2020, estimating a compound annual growth rate (CAGR) of 2.0% from 2018 through 2023, reaching $524 billion in 2023.