The numbers are rolling in for the global semiconductor industry in 2013, and they look good, according to several market research firms, thanks to a strong rebound in memory devices. Several market analysts peg growth at approximately five percent in 2013.
Revenue for the global semiconductor industry will total $315.4 billion in 2013, a 5.2 percent increase from 2012 revenue of $299.9 billion, according to preliminary results from Gartner, Inc. The Gartner report "Market Share Analysis: Preliminary Total Semiconductor Revenue, Worldwide, 2013," also finds that the top 25 semiconductor vendors' combined revenue increased 6.2 percent, delivering better performance than the rest of the market at a revenue growth rate of 2.9 percent.
Similarly, IHS reports that global semiconductor sales in 2013 will tally $317.9 billion, up 4.9 percent from $302.9 billion in 2012, according to preliminary estimates from the IHS Semiconductor Value Chain Service. This is up from a 2.5 percent drop in 2012, according to the market research firm.
The World Semiconductor Trade Statistics (WSTS) organization, which compiles the sales numbers for the Semiconductor Industry Association (SIA), forecasts that the semiconductor market will reach its highest annual sales total in 2013, growing 4.4 percent in 2013 to reach $304.3 billion. The WSTS forecasts a year-over-year increase for 2013 in the Americas (10.3 percent), Asia Pacific (7.2 percent), and Europe (4.3 percent), but a significant drop in Japan (-14.5 percent).
"With eight straight months of growth and a new monthly sales record in October, the global semiconductor industry is on track to exceed $300 billion in annual sales for the first time ever in 2013," said Brian Toohey, president and CEO, Semiconductor Industry Association, in a statement. "The industry is projected to maintain solid growth for the remainder of 2013 and into 2014, led largely by the Americas, which has remained well ahead of last year's pace. Congress and the Administration can help maintain and strengthen growth by resolving fiscal uncertainty and investing in scientific research," he further stated.
The SIA also released figures for worldwide sales of semiconductors for the month of October, which totaled $27.06 billion, a 7.2 percent increase from October 2012 when sales were $25.24 billion, and 0.8 percent higher than last month's total. SIA said October marks the eighth consecutive month of increasing sales and the industry's "first-ever month" above $27 billion in sales.
Where was the brightest spot? The Americas, which tallied a sequential monthly sales increase of 3.3 percent, followed by Europe at 1.7 percent. Compared to October 2012, sales increased in the Americas by 20.1 percent, Europe by 8.6 percent, and Asia Pacific by 7.4 percent, but fell by -12.1 percent in Japan, in part due to the devaluation of the Japanese yen, said SIA.
The sales growth comes after a slow start early in the year. "After a weak start to 2013 due to excess inventory, revenue growth strengthened in the second and third quarters before leveling off in the fourth quarter. Memory, in particular DRAM, led this growth, not due to strong demand, but rather weak supply growth," said Andrew Norwood, research vice president at Gartner, in a statement.
"In fact, the overall market faced a number of demand headwinds with PC production declining 9 percent and the premium smartphone market showing signs of saturation, with growth tilting toward lower-priced, entry-level and midrange smartphone models. These demand headwinds become very visible when looking at revenue growth outside of memory, where the rest of the semiconductor market could only muster 0.4 percent growth," he further stated.
Despite these issues, Intel once again retained its No. 1 market share position for the 22nd consecutive year, although revenue declined by 2.2 percent in 2013, according to Gartner.
Other key findings show that MediaTek and Qualcomm, two mobile handset providers, were market leaders in Gartner's Relative Industry Performance (RIP) index. They grew 35 percent and 28 percent, respectively, better than their respective markets. Underperformers included Rohm, Renesas Electronics, Samsung Electronics and Sony. A major reason for the Japanese suppliers include the "rapid devaluation of Japanese currency," said Gartner.
Thanks for the memories
Market analysts attribute the sales growth to demand and pricing levels in the memory device market, particularly for DRAM and NAND flash memory. Gartner expects these markets to increase by 35 percent and 27.7 percent, respectively in 2013.
“Memory chips are coming to the rescue of the semiconductor business in 2013,” said Dale Ford, head of electronics and semiconductor research at IHS, in a statement. “Solid pricing and expanding demand for DRAM and NAND in smartphones and tablets have caused revenue for these memory devices to surge. Without these two high-performing product segments, the semiconductor industry would attain zero growth this year.”
Preliminary analyst results indicate that memory vendors outperformed the rest of the semiconductor industry with SK Hynix and Micron Technology (See: Micron Stabilizes, Predicts End DRAM 'Arms' Race) leading the pack. SK Hynix's revenue increased 43.2 percent, pegged at the strongest organic growth in the top 25, despite the fire at the company's DRAM fab in Wuxi, China, while Micron grew revenue by nearly 71 percent, thanks in part to its acquisition of Elpida Memory this year, according to Gartner.
"Within the memory market DRAM was in the midst of a strong rebound following two years of revenue decline; the recovery started at the end of 2012 when the market was moving back into an undersupply due to lack of new capacity resulting in commodity DRAM pricing more than doubling during the year," stated Norwood.
More good news ahead. The WSTS expects the global semiconductor market to grow 4.1 percent in 2014, to reach $316.6 billion, followed by 3.4 percent growth in 2015, totaling $327.3 billion.