System on Module Market Research Report and Outlook by 2028

The System on Module (SoM) market is projected to expand significantly, increasing from US$ 2,174.8 million in 2022 to US$ 3,682.6 million by 2028. This growth represents a compound annual growth rate (CAGR) of 9.2% over the forecast period from 2022 to 2028.

A notable trend in the industrial automation sector is the rising adoption of multicore processors, alongside the integration of advanced features such as wireless connectivity, smart sensors, and imaging technologies. These advancements have led to a heightened demand for sophisticated and efficient systems. As a result, manufacturers are now able to offer single-chip solutions with multiple cores, which not only reduces costs but also provides a variety of CPU options while simplifying design requirements for clients. Such developments are significantly contributing to the analysis of the global system on module market.

Key players in the market are employing various strategies to enhance their market presence, including expanding product lines and geographic reach, engaging in mergers and acquisitions, and forming partnerships and collaborations. For instance, in May 2020, Avnet, a prominent electronic component and service provider, introduced the Avnet XRF16 SoM designed for next-generation 5G connectivity. Similarly, in April 2020, iENSO launched an Allwinner system on module aimed at facilitating quicker integration of image sensors and peripheral technologies. These innovations by market participants are expected to further stimulate the growth of the system on module market.

Impact of COVID-19 Pandemic on the System on Module Market

System on Module solutions play a crucial role in consumer electronics and entertainment devices, including smartphones, gaming consoles, and televisions. The rising demand for these devices has consequently increased the need for SoMs in embedded systems. India, being the second-largest smartphone manufacturer globally, relies heavily on semiconductor chips, which are integral to these devices. The ongoing technological advancements in areas such as 5G, the Internet of Things (IoT), and artificial intelligence (AI) are anticipated to further escalate the demand for chips in the near future. According to the India Electronics and Semiconductor Association (IESA), India consumed approximately US$ 21 billion worth of semiconductors in 2019, with a consumption growth rate of 15.1%.

In contrast, China, the largest automotive market, experienced a decline in vehicle sales in 2021 due to a semiconductor shortage, prompting original equipment manufacturers (OEMs) in the region to reassess their manufacturing strategies during the COVID-19 pandemic. Manufacturers are now focusing on transforming their operations to gain a competitive edge, which is expected to be a significant driver for the system on module market.

In 2021, many Asian countries increased their budgets to recover from the economic fallout and modernize their semiconductor industries. Initiatives aimed at enhancing manufacturing flexibility are expected to drive growth and agility within the Asia Pacific system on module manufacturing sector. For example, China has committed to increasing its investment in research and development for advanced chips as part of its new five-year economic plan. The Semiconductor Manufacturing International Corporation has announced plans for a US$ 2.35 billion facility, supported by the Shenzhen government. Additionally, the Indian government has pledged around US$ 1 billion to each company that establishes a chip manufacturing unit in India, which is likely to enhance the market share of system on modules in the Asia Pacific region.

While industrial automation in the Asia Pacific region is still evolving compared to North America and Europe, there has been a noticeable shift in recent years, with manufacturers across various sectors increasingly adopting Industrial Internet of Things (IIoT) solutions. Key sectors such as automotive and pharmaceuticals are leading the way in industrial automation, while machinery and chemical manufacturers are gradually embracing these technologies. However, sectors like oil and gas, as well as mining, are lagging behind. The healthcare sector in Asia Pacific is also experiencing significant growth due to rising health issues, an increase in healthcare facilities, higher disposable incomes, and supportive government policies. Furthermore, substantial investments are being made in the development of airports and the expansion of transportation infrastructure, which are expected to create numerous growth opportunities for system on module market players in the region.

In 2021, China held the largest share of the system on module market, being a leading manufacturer of electronic components and devices both regionally and globally. The increasing demand for consumer electronics and advancements in packaging technologies are key factors driving the growth of the system on module market in China. Companies are expanding their operations in the country to provide advanced solutions and enhance production capabilities. The emergence of 5G and AI technologies has significantly influenced the market, leading to greater adoption of IoT, IIoT, and automated smart city applications. Additionally, the deployment of advanced interaction systems such as robots, point-of-sale systems, and kiosks in transportation hubs is expected to further propel market growth in China.

Prominent players in the global system on module market include National Instruments, Advantech Co., Ltd., Axiomtek Co., Ltd., Emac, Inc., and Microchip Technology, Inc., all of which are profiled in this market analysis.

The overall size of the system on module market has been determined through a combination of primary and secondary research methods. The research process began with extensive secondary research utilizing both internal and external sources to gather qualitative and quantitative data related to the market. This approach also aimed to provide an overview and forecast of market growth across all segments. Additionally, multiple primary interviews were conducted with industry participants and experts to validate the data and gain deeper analytical insights. Participants included industry professionals such as VPs, business development managers, market intelligence managers, and national sales managers, as well as external consultants specializing in the system on module market.