Embedded systems are application-specific systems that are designed to meet the requirements of the target system in which they are embedded. Growing demand for devices such as smart electricity meters is expected to drive the global market over the forecast period. This is mainly because these devices incorporate embedded systems in order to ensure accurate and desired functionality. The demand for smart meters is expected to continue increasing over the forecast period, on account of energy efficiency initiatives on a global level, thus giving impetus to the embedded systems market. Technological advancement as well as decreasing prices of microcontroller units is also expected to favorably impact the market over the forecast period. Embedded systems are used in numerous end-use industries; as a result, increasing demand from application areas such as healthcare and consumer electronics is expected to fuel market growth over the next six years. The global embedded systems market was valued at USD 140.32 billion in 2013, and is expected to reach USD 214.39 billion by 2020, growing at a CAGR of 6.3% from 2014 to 2020.
Embedded hardware accounted for 93.8% of the overall market share in 2013, and is expected to continue dominating the overall market over the forecast period. It primarily consists of microprocessors, Digital Signal Processors (DSP), microcontrollers, etc. Embedded software comprises operating system (OS), tools as well as middleware. Embedded systems have real-time constraints since they are used for a variety of safety critical purposes. This has led to the need for efficient software tailored for the target application. This segment is expected to grow at a CAGR of 8.1% from 2014 to 2020.
Automotive applications accounted for 20.8% of the market in 2013 and are expected to remain the largest segment over the next six years. In the automotive space, embedded systems are used for engine control, infotainment, and safety among others. Increasing demand for vehicles equipped with effective navigation and car-to-road communication capabilities is expected to boost the market in this segment. Furthermore, increasing penetration of electric vehicles (EV) and hybrid electric vehicles (HEV) for ensuring emission control is estimated to drive embedded system consumption. Healthcare is expected to be the fastest growing application, at a CAGR of 7.1% from 2014 to 2020. Portable and handheld medical devices and equipments such as vital signs monitoring systems make extensive use of embedded systems. Consumer electronics including mobile phones, microwave ovens as well as HVAC (heating, ventilation, and air conditioning) systems use embedded hardware and software, and the segment is expected to grow faster than the global average over the next six years. Industrial applications comprise process control, energy, infrastructure, etc. Smart metering systems, as well as data acquisition and feedback control systems for automation are expected to contribute to the global market for industrial applications.
North America was the largest regional market in 2013; it is expected to maintain its leadership position over the next six years. The Asia Pacific market is expected to grow at the fastest CAGR of 6.7% from 2014 to 2020. This is made possible by the considerable number of trained professionals involved in software development for embedded systems in the region. In addition, the presence of fabrication plants such as the Taiwan Semiconductor Manufacturing Company (TSMC) has alleviated has helped lower manufacturing costs.
The global embedded systems market comprises a large number of players, divided on the basis of their product offering. Major hardware components developed include microprocessors, DSPs and microcontrollers. Key industry participants include Renesas Electronics, Freescale Semiconductor, Intel Corporation, Samsung Electronics Corporation, Atmel and Qualcomm among others. Companies operating in the market report revenue generation from segments such as automotive, industrial, and multi-market segments such as healthcare, consumer electronics, telecommunication, etc.