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The global automated test equipment market was valued at $3.84 billion in 2018 and is expected to reach a value of $4.72 billion by 2024 at a CAGR of 3.53% during the forecast period (2019 - 2024).
- The market for ATE is primarily dependent on semiconductor chip volume. The industry is positively impacted by the success of consumer electronic devices, such as computers, smartphones, tablets et al. Subsequently, the roll out of devices with new features and innovation is also expected to fuel the growth of the industry on the whole.
- There have been significant investments in the hardware market to provide engineers and scientists the flexibility, miniaturization, and portability to adapt to changing needs, while offering a smaller form factor that occupies less space on the manufacturing floor and consumes less energy, than traditional instrumentation equipment. As a result, the product offerings in the market are moving towards integrated solutions, while offering flexible options for a scripting language.
- The semiconductor market is highly competitive due to upgraded technologies and constant R&D. The price of a chip may fall to 50% in the coming years, which implies that the cost of production keeps changing due to emerging technologies, leading to decline in demand for products that have become technologically obsolete.
Key Market Trends
Aerospace and Defence is Expected to Hold a Significant Market Share
- The aerospace and defense industry has witnessed a rise in the adoption of intricate devices, in the last three decades, owing to an increasing defense spending by the governments in the region. This has led to the development of technology at a rapid pace, with innovation leading to improvement in the efficiency of existing tools and further covering the new scope of operations useful for a wide range of functions. With larger revenues, the aerospace industry is expected to spend a significant amount in the automated test equipment.
- Engineers are facing the hurdle of developing test plans for new technologies while also supporting legacy systems and prevent the obsolescence, such as avionics and electronics on the Boeing B-52 Stratofortress military aircraft produced in the 1950s and 1960s and still in service more than 50 years later.
- The other major driver in the market is the regulatory environment. For instance, military radios are increasingly being tested to the new specifications of civil airborne software and hardware standards, such as RTCA/DO-178B, Software Considerations in Airborne Systems and Equipment Certification, and RTCA/DO-254 Level C, Design Assurance Guidance for Airborne Electronic Hardware.
- With the implementation of new technology, the need for upgrading the test equipment also arises. For instance, U.S. Naval Air Systems Command (NAVAIR) refreshed the technology as they transitioned from the older system to the newer system for testing aircraft and weapons on carriers. The organization maintained backward compatibility as a requirement, enabling the eCASS stations to leverage the test program set from the older CASS program.
- Obsolescence mitigation is driving increased investment in test equipment. Most military and aerospace programs run for years, and companies must keep the technology fresh so that they can add new capabilities, plus address the obsolescence issues that always crop up.
- With the increasing revenues of aerospace manufacturers, the investment in testing equipment is expected to increase due to the practice of controlling the input costs to increase the profit margins.
North America is Expected to Have a Significant Market Share
- The growing demand for low-cost consumer products, coupled with a steady rise in the adoption in the semiconductor industry, has been identified as the major drivers for the growth of the ATE market in the North American region. Although ATE are highly expensive devices, they represent a cost-effective solution in the long-term, as they can be used for testing large volumes of samples with minimal human intervention.
- The market in Canada is majorly driven by the re-surging mining industry and increase defense spending. Key upcoming identified accounts for the providers are higher education institutes, like colleges, universities and trade and technical schools and R&D labs.
- The huge aerospace industry of the United States exports more than 60% of all aerospace production. Many foreign firms are attracted to the country's aerospace market as it is the largest in the world, characterized by skilled and hospitable workforce, diverse offerings and extensive distribution systems. Automated test equipment further finds its application in the defense sector. The defense industry in the country has a budget allocation, which is more than the entire economy of more than half of the existing countries in the world.
- The application of ATE in consumer electronics such as mobile devices is prospering in order to make the release schedules shorter. With growing cybersecurity threats and rising complexity of applications, organizations are also enhancing the test coverage for their enterprise application suite with the help of ATE throughout the region.