Global semiconductor revenues smashed records in 2017. So, when’s the bust? Gartner thinks it knows the answer…
South Korea’s Samsung Electronics has knocked Intel off its perch as the world’s biggest semiconductor company; a position that it had held unchallenged for 25 years.
That’s according to fresh research released this morning by Gartner.
The advisory firm also found that worldwide semiconductor revenue totalled a record $420.4 (£299) billion in 2017.
George Brocklehurst, research director at Gartner, said: “Both milestones (semiconductor revenue surpassing $400 billion, and Intel being pushed into second place) happened due to rapid growth in the memory market, as undersupply drove pricing for DRAM and NAND flash higher.”
Feast and Famine
In terms of revenues, South Korea’s SK hynix came third with $26,370 million; Micron Technology rose to fourth place with revenues of $22,895 million and Qualcomm (falling from third place in 2016) pipped Broadcom to fifth. Texas Instruments, Toshiba, Western Digital and NXP made up the rest of the top 10.
The memory market surged nearly $50 billion to reach $130 billion in 2017, a 61.8 percent increase from 2016. Samsung’s memory revenue alone increased nearly $20 billion in 2017, moving the company into the top spot in 2017. However, the research house predicts that the company’s lead will be short-lived and will disappear in late 2019.
With the semiconductor industry notorious for its “feast and famine” cycles, Gartner also expects the memory market to go into its bust cycle in late 2019.
Broadline Suppliers Surge
The booming memory segment overshadowed strong growth in other categories in 2017. Non-memory semiconductors grew $24.8 billion to reach $290 billion, representing a growth rate of 9.3 percent. Many of the broadline suppliers in the top 25 semiconductor vendors, including Texas Instruments, STMicroelectronics and Infineon, experience high growth as two key markets, industrial and automotive, continued double-digit growth, buoyed by broad-based growth across most other end markets.
The combined revenue of the top 10 semiconductor vendors increased by 30.6 percent during 2017 and accounted for 58 per cent of the total market, outperforming the rest of the market, which saw a milder 11.0 per cent revenue increase.
M&As are taking longer
2017 was a slower year for closing mergers and acquisitions (M&As), with roughly half the deal value and number of deals compared with 2016. However, the semiconductor industry continues to see escalating deal sizes with greater complexity, which are becoming more challenging to close. Avago set a record in its acquisition of Broadcom for $37 billion in 2016, and this record should soon be broken by Qualcomm’s acquisition of NXP Semiconductors for $44 billion.
The IoT is starting to pay vendor dividends
Growth in the Internet of Things (IoT) is having a significant impact on the semiconductor market, with application-specific standard products (ASSPs) for consumer applications up by 14.3 per cent and industrial ASSPs rising by 19.1 per cent in 2017. Semiconductors for wireless connectivity showed the highest growth with 19.3 per cent in 2017, and topping $10 billion for the first time, despite reduced component prices and the static smartphone industry.