DRAM Contract Prices Remain Under Pressure; NAND Poised for Rebound
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El Segundo, Calif. – Revenue growth in the global semiconductor industry is forecast to grow by 9.4 percent in 2014 thanks to broad-based growth across multiple chip segments, according to the latest research from IHS Technology. This is the industry’s best performance since 2010, when the industry grew 33 percent, reports IHS.
Global revenue is expected to total $353.2 billion, up from $322.8 billion in 2013, according to a preliminary estimate from IHS. This follows 6.4 percent growth in 2013, a decline of more than 2.0 percent in 2012 and an increase of 1.0 percent in 2011.
Other industry researchers agree on strong growth for this year. Gartner recently raised its growth estimate for the industry to 7.2 percent compared to last year. The market research firm expects the global semiconductor market to reach $338.0 billion in 2014 fueled in part by the strong electronics build for the holiday season. The Semiconductor Industry Association (SIA) has been reporting solid sales growth throughout 2014.
The latest report shows that global sales of semiconductors reached $87 billion in the third quarter of 2014, which is an increase of 5.7 percent over the previous quarter, and an eight percent increase compared to the third quarter of 2013.
"Through the third quarter of 2014, global semiconductor sales remain strong and well ahead of last year's pace," said Brian Toohey, president and CEO, Semiconductor Industry Association, in a statement. "The industry has now posted seven consecutive months of sequential monthly growth, and year-to-year growth has been strong across nearly all semiconductor product categories, with DRAM and analog leading the way."
Of the 28 key sub-segments of the semiconductor market tracked by IHS, 22 are expected to expand in 2014, with 15 sub-segments growing by more than five percent and eight growing in the double digits, according to the latest release of the Competitive Landscaping Tool from the Semiconductors & Components service. In comparison, only 12 sub-segments grew in 2013. Of those 12 sub-segments, only eight grew by five percent or more and three grew in the double digits.
“This is the healthiest the semiconductor business has been in many years, not only in light of the overall growth, but also because of the broad-based nature of the market expansion,” said Dale Ford, vice president and chief analyst at IHS Technology, in a statement. “While the upswing in 2013 was almost entirely driven by growth in a few specific memory segments, the rise in 2014 is built on a widespread increase in demand for a variety of different types of chips. Because of this, nearly all semiconductor suppliers can enjoy good cheer as they enter the 2014 holiday season.”
Source: IHS (Please click to enlarge.)
Last year, the key drivers of growth in the semiconductor market were DRAM and data flash memory, which together grew by more than 30 percent while the rest of the market only expanded by 1.5 percent. However, in 2014, the combined revenue for DRAM and data flash memory is projected to rise about 20 percent, while the rest of the market will grow by 6.7 percent to support the overall market increase of 9.4 percent, reports IHS.
DRAMs and LEDs continue to post the “strongest and most consistent growth” over the past two years. DRAM revenue will increase 33 percent for two years in a row in 2013 and 2014, following big revenue declines in five of the last six years, said IHS. The LED market is expected to grow by more than 11 percent in 2014, which extends the market’s “unbroken period of growth for LED revenues stretching back at least 13 years.”
IHS reports most segments will see growth improve by more than 10 percent in 2014, compared to declines last year. Analog, discrete and microprocessor markets will swing from declines to strong growth in every sub-segment.
Also expected to see good growth in 2014 are PLDs and DSP ASICs. Here are the numbers: PLD revenue will grow by 10.2 percent compared to 2.1 percent in 2013, and DSP ASICs will increase by 3.8 percent compared to a 31.9 percent drop in 2013.
This translates into good growth for semiconductor suppliers with 70 percent of them forecasted to post revenue growth in 2014, up from 53 percent in 2013. IHS expects MediaTek and Avago Technologies to tally the biggest revenue growth and rise in 2014 rankings, benefiting from significant acquisitions. MediaTek is expected to become the first semiconductor company headquartered in Taiwan to break into the Top 10, climbing five spots to No. 10.
However, in terms of organic revenue growth, SK Hynix is expected to achieve the strongest growth with a projected growth rate of nearly 23 percent. If No. 13-ranked Infineon completes its acquisition of International Rectifier this year, the chipmaker will rise to No. 10 in overall rankings with a 16 percent combined growth, said IHS.
The trouble spots are consumer electronics and Japan, said IHS. The only market segment experiencing a decline this year will be consumer electronics, and Japan is the only worldwide region that will experience a decline in semiconductor revenues this year. Revenues will be led by Asia-Pacific with a projected increase of 12.5 percent.
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