Global chip market relies on memory for growth

January 08, 2019 // By Peter Clarke
Worldwide semiconductor revenue was $476.7 billion in 2018, a 13.4 percent increase from the 2017 total, according to preliminary results from market analysis firm Gartner Inc.

The final annual growth was almost twice that predicted by the company in January 2018 (see Gartner increases 2018 global chip forecast). However, the annual growth is not set to reach the bullish heights predicted by Malcolm Penn of Future Horizons at the same time (see 2018 to be a $500 billion chip market, says Penn).

The main reason for the growth was the continuation of 2017's memory boom through most of 2018 and as a result memory strengthened its position as the largest semiconductor category, accounting for 34.8 percent of total semiconductor revenue, up from 31 percent in 2017.

Top 10 semiconductor vendors by worldwide revenue, 2018 (millions of US dollars). Source: Gartner.

This memory strength also helped Samsung to increase its lead as the number one chip supplier over Intel, which has previously suffered from weakness in the PC market. Intel’s semiconductor revenue grew by 12.2 percent compared with 2017, driven by a combination of unit and average selling price (ASP) growth. It is also notable that STMicroelectronics leap-frogged above NXP Semiconductors by way of stronger than market average growth, despite not being a memory player.

Market conditions and changing memory market fortunes in particular could influence the market in 2019, according to Andrew Norwood, semiconductor analyst at Gartner.

"The current rankings may see significant change this year with the expectation that memory market conditions will weaken in 2019," said Norwood, in a statement. He added that established memory vendors need to prepare for the entry of Chinese vendors and oversupply by funding R&D on node transitions and emerging memory technologies.

The second-largest semiconductor category, application-specific-standard products (ASSPs), grew by 5.1 percent due to a stalling smartphone and declining tablet computer market. This is pushing companies to try to expand into adjacent markets with stronger growth prospects such as automotive and IoT applications.

"2019 will be a very different market from the previous two years," said Norwood. "Memory has already entered a downturn, there is the looming trade war between the US and China, and mounting uncertainty about the global economy."

Related links and articles:

www.gartner.com

News articles:

Gartner increases 2018 global chip forecast

2018 to be a $500 billion chip market, says Penn

IC Insights doubles forecast for chip market growth


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