Industry 4.0 or smart factory implies that industrial machinery will have smart product processing capability and also communicate with the machinery without human aid by bridging the physical and virtual worlds. Industry 4.0 will have major implications for the semiconductor and sensor market, as it is an integral part of every industrial automation and communication systems. By 2020, the number of connected devices will touch approximately 50 billion. In addition, the Industrial Internet of Things (IIOT) will add $14.2 trillion to the global economy over the next 15 years.

Industrial Revolution

  1. The First Industrial Revolution—The introduction of mechanical production with the help of water and stream
  2. The Second Industrial Revolution—The introduction of a division labor and mass production with the help of electrical energy
  3. The Third Industrial Revolution—The introduction of electronic and IT system for automated product
  4. The Fourth Industrial Revolution—The introduction of Cyber-Physical System (CPS)

Smart factories comprise self-organizing machines which enhance operational profitability and increase process productivity. The evolution of embedded systems, with the combined effect of Internet connectivity and online data service, gives rise to a new era of cyber-physical systems (CPS), transforming the current manufacturing ecosystem into a smart industry or Industry 4.0. The introduction of CPS will merge the real and virtual worlds together. These systems have high flexibility, self-organization, self-adaptability, immense fault tolerance and risk management capabilities. These characteristics proportionally increase real-time quality, resource, time-to-market and cost advantages of classic production. Such intelligent systems optimize an in-house production process so that it is not limited to the production of a single product but has the capability to produce more than one product through multiple remote operators.

Industry 4.0 is expected to flourish over the next 2 to 3 years. Developed regions, such as Europe and North America, are the front runners, as Industry 4.0 has made quite an impact on production and boosted their economies.

With data being collected from various sources, Big Data will become the new standard that supports real-time decision making. Autonomous robots play a major role in smart industries; for example, a robotic manufacturer in Europe offers robots that interact with one another.

The development of smart factory depends on innovation in the manufacturing of semiconductors, sensors, cloud computing, Industrial Internet of Things (IIoT) and smart devices. In addition to an uptick in device connectivity, digitization of industry automation is likely to boost the demand for state-of-the-art semiconductors and sensors, especially advanced semiconductors that increase performance and efficiency of smart devices
The smart factory value chain is made of devices that are both intelligent and connected; the intricacy of this ecosystem significantly boosts the demand for semiconductor devices. Semiconductor market players are investing heavily in adapting their integrated chip designs and development processes to suit specific smart factory requirements. The connected devices smart factory (and IIoT) is expected to grow from about 10 to 15 billion devices today to about 80 billion devices by 2020.

Smart sensors authorize products, packing quality at high speed and detect the position of the components. By 2020, there will be 5 to 6 billion Internet users. More than 80 billion devices will be connected worldwide, which will in turn automatically expand the sensors and the semiconductors market. Smart sensors can automatically adapt to any condition under a certain range. Connected devices require both semiconductor chips and sensors which translate into a direct growth opportunity for both semiconductor and sensor markets.  Sensor function, which forms the backbone of major Industry 4.0 transformation, will pave the way for greater market growth.

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