Global semiconductor revenue to decline by 9.6% year on year in 2019, says Gartner

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Gartner’s latest report has predicted a global decline in semiconductor revenue this year.

According to the market researcher, the revenue will decrease $429b (£344b), which is a decline of 9.6% from $475b (£380b) in 2018. This is also a decline from previous quarter’s forecast of -3.4%.

Gartner says that a demand-driven oversupply in the DRAM market will be responsible for a 42.1% decline in pricing in 2019 and the oversupply is likely to extend through Q2/2020. The reason behind the fall is said to be a slower demand recovery at the hyperscale vendors and the increasing inventory levels of DRAM vendors.

Ben Lee, senior principal research analyst at Gartner, said: “We expect that high smartphone inventory and sluggish solid-state array demand will last for a few more quarters. Given the aggressive price declines for NAND, it is possible to see a more balanced supply/demand outlook in 2020. However, looking further out is concerning given slowing demand drivers, such as PCs and smartphones, and more capacity as new fabs in China impact the market.”

In June, Infineon Technologies acquired Cypress for an enterprise value of $9.98 billion (£7.9bn), corresponding to $23.85 per share in cash. The acquisition of Cypress aimed to allow Infineon to increase its focus on structural growth drivers and offer a wider range of applications. The companies see Infineion’s semiconductors, sensors and security solutions being highly compatible with Cypress’s differentiated portfolio of microcontrollers, software, and connectivity components.

Contrary to the Gartner report, data provided by the Semiconductor Industry Association (SIA) last year had reported that global sales of semiconductors reached $40.16b (£40.16b) for the month of August 2018, which was a 14.9% year-on-year increase compared to August 2017. Stratistics MRC had then said that many semiconductor companies started adopting IoT to drive new revenue and growth models. A report from Accenture too supported the fact that the semiconductor industry is the most bullish one when it comes to integrate blockchain within their industry and the impact of AI.

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