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The global Internet of Things (IoT) semiconductor component market will grow at a compound annual growth rate of 19 per cent from $33 billion in 2020 to $80 billion in 2025, said a new report.

The penetration of semiconductor components classified as IoT is expected to grow from 7 per cent in 2019 to 12 per cent by 2025, said the report by market insights firm IoT Analytics.

Key components driving this IoT semiconductor growth are microcontroller units (MCUs), connectivity chipsets, Artificial Intelligence (AI) chipsets, and security chipsets and modules.

The increasing penetration of IoT semiconductors will necessitate chipmakers to put an enhanced focus on typical IoT requirements, for example, ultra-low power, smaller form factor and built-in security.

The industry has profited from the need for more and higher-value semiconductor components for several newly emerging technologies.

Key drivers include big data analytics, mobile communication, gaming, connected and semi-autonomous cars, and to a large degree, the fast growth of IoT devices, said the report.

The number of active IoT device connections grew from 3.6 billion in 2015 to 11.7 billion in 2020, according to the estimate by IoT Analytics.

By the end of 2025, the numbers could grow to a total of 30 billion IoT connections, according to the forecast.

The rise of the IoT semiconductor market is broad and touches most industry segments, including industrial, automotive, energy and utilities, and healthcare.

Consumer IoT devices such as smartwatches and smaller wireless accessories have seen a particularly high demand in recent years, which has prompted several companies including some smartphone makers that were not making IoT devices a few years ago to move into the IoT ecosystem.

The current IoT device explosion will continue to drive the IoT semiconductor market and will likely lead to further semiconductor innovations amid higher production volumes, said the report.