The global semiconductor market is forecast to reach $411.1 billion in 2017, an increase of 19.7 percent from 2016, according to Gartner, Inc. This is up from the market research firm’s previous revenue forecast of $401.4 billion. Analysts attribute growth to the memory device segment, which has been marked by price hikes and tight supply since the fourth quarter of 2016.
The latest forecast "represents the strongest growth since the 2010 recovery from the financial crisis when revenue increased by 31.8 percent," said Gartner.
Research firm IC Insights also revised its 2017 chip forecast from five percent in January to 16 percent in July due to “exceptional growth” in the DRAM and NAND flash markets driven in part by higher price tags.
Industry analysts expect price increases and tight supply will continue during the remainder of 2017.
The latest research from DRAMeXchange indicates that the memory device market will see an average sequential price increase of 10 percent in the fourth quarter of 2017. Mobile DRAM prices will rise the most between 10 to 15 percent. Analysts expect DRAM prices will be impacted by tight supply in 2018.
"Memory continues to lead the semiconductor market higher and is expected to increase 57 percent in 2017 as supply and demand dynamics increase prices. A shortage of memory, and in particular DRAM, is driving semiconductor revenue higher," said Jon Erensen, research director at Gartner, in a statement. "Strength is spreading to other semiconductor categories as well with nonoptical sensors, analog, discretes and image sensors all forecast to grow over 10 percent in 2017.
"Higher memory costs and component shortages are cause for concern as we enter the fourth quarter," said Erensen. "Memory is driving the bill-of-materials cost higher across electronic equipment categories and we are starting to see increased costs get passed on by OEMs through higher pricing."
However, growth is expected to slow in 2018. Gartner forecasts the chip market to increase by four percent in 2018, reaching $427.4 billion, and decline one percent in 2019 as memory production capacity ramps up. New fabs are planned to help with tight supply but won’t be ready for mass production until 2019.