A memory shortage, which has driven up supplier pricing and margins over the past year for DRAM and NAND flash devices, is now spurring semiconductor revenue growth above the $400 billion mark in 2017. The global semiconductor industry is forecast to reach $401.4 billion in 2017, up 16.8 percent from 2016, according to Gartner, Inc.
"A shortage of memory is creating a boom in the overall semiconductor market," said Andrew Norwood, research vice president at Gartner, in a statement. "Memory vendors have been able to increase their price for DRAM and NAND, driving revenue and margins higher."
A shut down of Inotera’s Fab-2 fabrication plant on July 1 due to a malfunction that contaminated the wafers and equipment in the facility also may cause further shortages and price increases, according to DRAMeXchange.
This is the first time semiconductor revenue has surpassed $400 billion, according to Norwood. Other milestones include reaching $300 billion in 2010 and surpassing $200 billion in 2000.
IC Insights also is bullish on the semiconductor market. The market researcher expects the global semiconductor market to reach $419.1 billion in 2017, increasing 15 percent from 2016, and exceeding $500 billion in 2021.
If the semiconductor industry reaches its revenue forecast in 2017, the average semiconductor content in an electronic system will reach 28.1 percent, an all-time record, according to IC Insights. However, the market research firm expects the 2017 global electronic systems market to grow by only two percent, reaching $1,493 billion.
IC Insights attributes the big increase in the average semiconductor content in electronic systems in 2017 to higher DRAM and NAND flash average selling prices (ASPs) and below average electronic system sales growth this year.
“With global unit shipments of cellphones (0%), automobiles (2%), and PCs (-2%) forecast to be weak in 2017, the disparity between the slow growth in the electronic systems market and high growth of the semiconductor market is directly due to the increasing content of semiconductors in electronic systems,” explained IC Insights.
Gartner’s Norwood expects the boom in the memory market, which is forecast to grow 52 percent in 2017, to have a big impact on semiconductor market share rankings. "As the largest memory supplier, Samsung Electronics is set to gain the most," said Norwood. "This gives Samsung its best shot at capturing the No. 1 position from Intel for the first time."
Intel has held on to the No. 1 position since 1992 when it dethroned NEC, according to Gartner. Similarly, Samsung has ranked at No. 2 since 2002.
"What the memory market gives, the memory market takes away," Norwood added. "The memory bubble is expected to go bust in 2019 as memory vendors add new supply and Samsung could lose a lot of the gains it makes this year and next.”