Top 25 Semiconductor Vendors Grow 8% in 2016

The combined revenue of the top 25 semiconductor vendors increased by 7.9 percent in 2016 compared with 2015, while the total global market increased by only 1.5 percent, reaching $339.7 billion in 2016, according to Gartner Inc.

The top 25 semiconductors, led by Intel, which maintained its number one position for the 25th consecutive year, accounted for 75.9 percent of the total market. Intel holds 15.9 percent of the market share, followed by Samsung Electronics with 11.8 percent of the market. Rounding out the top five are Qualcomm, SK Hynix and Broadcom.

Broadcom Corp. tallied the largest growth among the Top 25, moving up to the fifth position from number 16, after the Avago Technologies acquisition of Broadcom.

"After a poor start to the year, characterized by inventory burn-off, the second half of 2016 was fueled by inventory replenishment and improved demand and pricing," said Adriana Blanco, senior research analyst at Gartner, in a statement. "Overall, semiconductor revenue for the second half of the year was much stronger than the first half, reflecting the strengthening memory market and continued inventory replenishment, as well as inventory build for both the iPhone 7 and the holiday season."

Table 1. Top 10 Semiconductor Vendors by Revenue, Worldwide, 2016 (Millions of Dollars)

2016 Rank	2015 Rank	Vendor	2016 Revenue	2016 Market Share (%)	2015 Revenue	2015-2016 Growth (%)
1	1	Intel	53,996	15.9	51,690	4.5
2	2	Samsung Electronics	40,143	11.8	37,852	6.1
3	4	Qualcomm	15,351	4.5	16,079	-4.5
4	3	SK Hynix	14,267	4.2	16,374	-12.9
5	16	Broadcom Ltd. (formerly Avago)	13,149	3.9	5,216	152.1
6	5	Micron Technology	12,585	3.7	13,816	-8.9
7	6	Texas Instruments	11,776	3.5	11,533	2.1
8	7	Toshiba	10,051	3.0	9,162	9.7
9	12	NXP	9,170	2.7	6,543	40.1
10	11	MediaTek	8,697	2.6	6,704	29.7
		Others	150,499	44.2	159,799	-5.8
		Total	339,684	100	334,768	1.5

Source: Gartner (January 2017)

"When it comes to end-application markets, wireless and compute are the largest end markets for semiconductors but showed very different growth patterns in 2016," said Blanco.

"Wireless revenue grew 9.6 percent and continued to be driven by smartphones and the exposure to the memory markets, where conditions were much more favorable than the overall memory market, in part because of strong bit content growth, and also improved performance of other device categories, including ASICs and nonoptical sensors,” she added. “Compute revenue, on the other hand, declined 8.3 percent, as it continues to be dragged down by a sluggish PC and tablet market and exposure to the memory segment."

Although the DRAM and NAND markets begin in oversupply with plummeting prices in 2016, the year ended with shortages and increased prices in the second half of the year, which spurred growth, according to Gartner and other industry analysts.

Gartner expects the growth momentum to continue into 2017. The market research firm forecasts the global semiconductor market to grow 7.2 percent in 2017, reaching $364.1 billion.

Gartner’s "Semiconductor Forecast Database, Worldwide, 4Q16 Update" also reveals an increased outlook by $14.1 billion, which the memory market accounts for nearly $10 billion.

"Memory market supply and demand have turned positive for memory vendors who are pushing ASPs higher to recover margins. ASP increases for application-specific standard products (ASSP), discrete and analog chips and higher semiconductor content in key applications including the Internet of Things (IoT) were the other key drivers for revenue increases," said Ganesh Ramamoorthy, research vice president at Gartner, in a statement.

"The worst is now over with a positive outlook emerging for 2017 driven by inventory replenishment and increasing average selling prices (ASPs) in select markets, particularly commodity memory and application-specific standard products," Ramamoorthy added. "The turnaround that started at the end of the second quarter of 2016 will continue to gain momentum and we expect the improved conditions to carry through 2017."

The end market segments to watch in 2017 include industrial, automotive and storage markets, which are growing more quickly although they account for a smaller piece of the overall market.

“Additionally, the slow-growth outlook for traditional applications such as smartphones and PCs highlights the importance of semiconductor markets outside of these categories, notably the IoT,” said Gartner.

"This implies that semiconductor product managers who have depended upon these categories must now continue to look for adjacent opportunities in new emerging applications in the IoT and in areas like industrial, storage and automotive markets," Ramamoorthy said.