Worldwide Semiconductor Revenue Grew 13.4 Percent in 2018 : Gartner

STAMFORD, Conn., January 7, 2019 :  Worldwide semiconductor revenue totaled $476.7 billion in 2018, a 13.4 percent increase from 2017, according to preliminary results by Gartner, Inc. Memory strengthened its position as the largest semiconductor category, accounting for 34.8 percent of total semiconductor revenue, up from 31 percent in 2017.

“The largest semiconductor supplier, Samsung Electronics, increased its lead as the No. 1 vendor due to the booming DRAM market,” said Andrew Norwood, Vice President, Analyst at Gartner. “While 2018 continued to build on the growth established in 2017, the overall gains driven by memory were at half the 2017 growth rate. This is attributed to memory entering a downturn late in 2018.”

The combined revenue of the top 25 semiconductor vendors increased by 16.3 percent during 2018 and accounted for 79.3 percent of the market, outperforming the rest of the market, which saw a milder 3.6 percent revenue increase. This is due to the concentration of the memory vendors in the top-25 ranking.

Intel’s semiconductor revenue grew by 12.2 percent compared with 2017, driven by a combination of unit and average selling price (ASP) growth. Major memory vendors that performed strongly in 2018 include SK hynix — driven by DRAM, and Microchip Technology — due to its acquisition of Microsemi. The top four vendors in 2017 retained their ranking in 2018.

Top 10 Semiconductor Vendors by Revenue, Worldwide, 2018 (Millions of U.S. Dollars)

2018 Rank 2017 Rank Vendor 2018 Revenue 2018 Market Share (%) 2017 Revenue 2017-2018 Growth (%)
1 1 Samsung Electronics 75,854 15.9 59,875 26.7
2 2 Intel 65,862 13.8 58,725 12.2
3 3 SK hynix 36,433 7.6 26,370 38.2
4 4 Micron Technology 30,641 6.4 22,895 33.8
5 6 Broadcom 16,544 3.5 15,405 7.4
6 5 Qualcomm 15,380 3.2 16,099 -4.5
7 7 Texas Instruments 14,767 3.1 13,506 9.3
8 9 Western Digital 9,321 2.0 9,159 1.8
9 11 ST Microelectronics 9,276 1.9 8,031 15.5
10 10 NXP Semiconductors 9,010 1.9 8,750 3.0
Others 98,648 20.7 95,215 3.6
Total Market 476,693 100.0 420,393 13.4

Source : Gartner (January 2019)

“The current rankings may see significant change this year with the expectation that memory market conditions will weaken in 2019,” said Mr. Norwood. “Technology product managers must prepare for this limited growth to succeed in the semiconductor industry.”

Memory vendors, for example, will need to plan for future oversupply and intense margin pressure by funding research and development on continued node transitions, emerging memory technologies and new manufacturing technologies. This will provide them the best cost structure as new entrants from China emerge.

“Nonmemory vendors must increase design-in activity with key customers that have been enduring high memory pricing. As the market for smartphones and tablets continues to saturate, application processor vendors must seek adjacent opportunities in wearables, Internet of Things (IoT) endpoints and automobiles”.

In terms of semiconductor devices, memory was simultaneously the largest (35 percent) and highest-performing device category for 2018 with 27.2 percent revenue growth. This was driven by increases in ASP for DRAM for much of the year with the exception of the fourth quarter of 2018.

Within the memory segment, NAND flash suffered a marked slowdown with ASP declines through much of the year due to oversupply. This device category still managed to show a 6.5 percent revenue increase, driven by higher adoption of solid-state drives (SSDs) and increasing content in smartphones.

The second-largest semiconductor category, application-specific-standard products (ASSPs), saw limited growth of 5.1 percent due to a stalling smartphone market combined with a tablet market that continues to decline. Leading vendors in this segment area, including Qualcomm and MediaTek, are aggressively expanding into adjacent markets with stronger prospects for growth, including automotive and IoT applications.

Merger and acquisition (M&A) activity in 2018 was more significant for the deals that did not happen than the deals that did. Broadcom’s hostile takeover attempt of Qualcomm failed as the U.S. government stepped in, and Qualcomm’s bid to secure NXP became embroiled in the ongoing trade war with China. Completed deals included Toshiba spinning off its NAND business into Toshiba Memory in June 2018 and Microchip’s May 2018 acquisition of Microsemi.

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

Gartner clients can get more information in “Market Share Analysis: Semiconductors, Worldwide, Preliminary 2018.”

About Technology For You

Technology For You (TFY) is a Leading Technology & Career Magazine. In addition to the Print Edition, we have been bringing out Web Edition also with Daily News & Updates. This is one of the Largest Circulated magazine in South India, and also reaching across India.
View all posts by Technology For You →

Leave a Reply

Your email address will not be published. Required fields are marked *