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Gartner: Slow year ahead for global chip market

Posted: 24 Apr 2015 ?? ?Print Version ?Bookmark and Share

Keywords:chip market? Gartner? PC? IHS? DRAM?

The global semiconductor sales is expected to reach $354 billion in 2015, a 4 per cent increase from last year, according to Gartner. That projection, however, is still down from the previous quarter's forecast of 5.4 per cent growth.

"Concern is mounting about semiconductor revenue growth in 2015 as system suppliers start to grapple with the rapid depreciation in value of global currencies relative to the U.S. dollar, excess inventories in the semiconductor and electronics supply chains, and the end of a PC upgrade cycle," said Bryan Lewis, research vice president at Gartner. "The downward revision from last quarter's forecast is due to these three factors combining to create a significant headwind for the semiconductor market in 2015."

Gartner's growth forecast is lower than the 5 per cent forecast by IHS Technology. Dale Ford, vice president and chief analyst at IHS Technology said, "The more moderate 2015 growth is due primarily to more modest increases in the memory and microcomponent categories. The dominant share of semiconductor markets will continue to see vibrant growth in 2015."

In 2014, annual sales in all four regional markets increased for the first time since 2010. The Semiconductor Industry Association reported that sales in the Americas rose by 12.7 per cent, while Asia-Pacific posted an 11.4 per cent growth. Europe increased by 7.4 per cent and Japan increased by 0.1 per cent, marking the first time annual sales in Japan increased since 2010.

This year, however, the strong dollar is causing system suppliers and system buyers to re-evaluate their strategies. According to Gartner, system suppliers will raise prices in select regions such as Europe to keep their margins intact as well as de-feature some products to maintain current price points. System buyers will push out purchases in select regions, extending product life cycles as well as buying down the price curve. All this leads to reduced semiconductor growth in 2015.

From an application point of view, smartphones, solid-state drives (SSDs) and ultramobiles will see the largest semiconductor growth, while the traditional PC segment will experience the greatest decline. Through 2015, the replacement demand is expected to remain muted, as consumers delay migrating to Windows 10. The next critical season for the PC and ultramobile markets is in the third quarter of 2015, when Windows 10 and Intel's Skylake products come to market.

From a device point of view, DRAM continues to be one of the primary growth drivers of the overall industry. DRAM revenue is expected to increase 7.9 per cent in 2015, following a 32 per cent increase in 2014. However, Gartner maintains its view that the good times in DRAM will come to an end in 2016 and 2017 when the DRAM industry revenue will decline 20.2 per cent and 8.4 per cent, respectively. While this may seem like a dire outlook, it is actually slightly better than the previous quarter's forecast for 2016 and 2017 declines of 30.1 per cent and 20.0 perc ent, respectively.

"2015 semiconductor growth hinges on the strength of the second-quarter bounce," said Lewis. "The second quarter is traditionally where we see strong sequential growth coming off the traditionally negative first quarter as inventory is burned off from the holidays. First quarter 2015 looks to have the worst sequential growth since 2009 with at least a 7 per cent decline, so a strong second-quarter bounce is needed to achieve the 4 per cent annual growth predicted for 2015. Intel's recent second quarter's mid-point sequential revenue guidance of a 3.3 per cent increase was in-line with the expected industry re-bound after it experienced a 13.2 per cent sequential decline in the first quarter of 2015."

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