Global semiconductor revenue is forecast to reach $338.0 billion in 2014, up 7.2 percent from 2013, according to Gartner Inc. This is up from Gartner’s previous quarter’s forecast of 6.7 percent growth. The uptick is being fueled by a strong electronics build for the holiday season, said the market research firm.
"Semiconductor revenue set an all-time record in the third quarter of 2014, fueled by a strong electronics build for the holiday season," said Jon Erensen, research director of Gartner, in a statement. "Get ready for a flood of new product introductions, ranging from simple low-cost tablets to high-end ultramobiles and smartphones. Demand for the iPhone 6 and iPhone 6 Plus has been robust, but there is concern for other types of devices planned for the holidays."
Gartner analysts remain bullish on 2014 consumer demand. The research firm forecasts 2014 unit production of smartphones and ultra-mobiles to increase 27.0 percent and 18.9 percent, respectively.
The Semiconductor Industry Association (SIA) solidifies Gartner’s estimate. The industry group reports that global sales of semiconductors reached $28.4 billion in August, up 9.4 percent from August 2013. Year-to-date sales through August are 10.1 percent higher than they were at the same point in 2013, said SIA. Monthly sales numbers are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average.
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"The global semiconductor market continued to demonstrate broad and sustained strength in August, and sales remain well ahead of last year's pace," said Brian Toohey, president and CEO, Semiconductor Industry Association, in a statement. "Demand is strong across nearly all semiconductor product categories, and the industry has now posted sequential monthly growth for six consecutive months, thanks in part to continued strength in the Americas market."
Toohey cited an SIA white paper released last week that finds that the U.S. semiconductor industry is one of the top contributors to U.S. economic growth compared to any domestic manufacturing industry.
By region, semiconductor sales were up compared to the previous month in the Americas (2.3 percent) and Asia Pacific (1.7 percent), while sales remained flat in Japan, and decreased slightly in Europe (-1.3 percent), said SIA. Year-to-year sales increased in Asia Pacific (12.3 percent), Europe (10.9 percent), and the Americas (7 percent), but decreased slightly in Japan (-1.7 percent). SIA also reported that sales increased across all regions for the three-month period from June to August compared to the previous three-month period from March to May.
The semiconductor market is expected to grow 5.8 percent in 2015, said Gartner. But high inventories in the first quarter of 2015 will be the biggest concern in the supply chain.
Gartner expects the boom-and-bust cycle in the DRAM market to rear its ugly head again in 2016. Although DRAM leads all semiconductors in 2014 with revenue growth of 26.3 percent and is expected to reach an all-time revenue high of $44.1 billion in 2014, Gartner predicts the next big memory oversupply downturn will hit in 2016. This will cause DRAM revenue to drop 25.5 percent, weakening overall 2016 semiconductor growth to 1.0 percent, according to the market researcher.