2019 semi sales down 11.9% from year before, says Gartner

semiconductors on board
Weak sales of memory and analog chips caused semiconductor sales to decline 11.9% in 2019 to $418.3 billion, according to market research firm Gartner. (Pixabay)

Most of the news about the semiconductor market the last six months has been negative, though market researchers are projecting a slight uptick this year as the bottom has dropped out. But the damage has been done, particularly to the memory market.

According to a Gartner report, global semiconductor revenue totaled $418.3 billion in 2019, down 11.9% from 2018. The study added that Intel regained the top position in the market as the downturn in the memory market negatively impacted Samsung Electronics, the No. 1 vendor by revenue in 2018 and 2017.

“The memory market, which accounted for 26.7% of semiconductor sales in 2019, experienced a 31.5% decline in revenue in 2019,” said Andrew Norwood, research vice president at Gartner, in a statement. “Within memory, DRAM revenue declined 37.5% due to an oversupply that started at the end of 2018 and lasted throughout 2019. The oversupply was caused by a sudden fall in demand from the hyperscale market. This revealed excessive OEM inventory levels that took the first half of the year to correct. Excessive inventory at DRAM vendors in the second half of 2019 pushed pricing lower and resulted in an average selling price (ASP) decline of 47.4% in 2019.”

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RELATED: Global semi sales slowly recovering but still down for 2019

Samsung’s woes caused Intel to reclaim its industry-leading position, though Gartner said the firm itself had a flat year. According to Garter, Intel’s semiconductor revenue declined 0.7% in 2019, driven by a slowdown in the server market, an ongoing constrained CPU supply and the 4Q19 sale of its cellular modem business to Apple.

Gartner noted that oversupply and falling DRAM and NAND flash prices caused Samsung’s memory revenue, which accounted for 82% of its sales, to tumble 34% in 2019. Preliminary 2019 semiconductor revenue for the top 10 vendors is listed below.

 

Top 10 Semiconductor Vendors by Revenue, Worldwide, 2019 (Millions of U.S. Dollars)

 

2019 rank

2018 rank

Vendor

2019 revenue

2019 market share (%)

2018 revenue

2018-2019 growth (%)

1

2

Intel

65,793

15,7

66,290

-0,7

 

2

1

Samsung Electronics

52,214

12.5

73,649

-29.1

 

3

3

SK Hynix

22,478

5,4

36,240

-38,0

 

4

4

Micron Technology

20,056

4,8

29,742

-32,6

 

5

5

Broadcom

15,293

3,7

16,261

-6,0

 

6

6

Qualcomm

13.537

3,2

15,375

-12,0

 

7

7

Texas Instruments

13,203

3,2

14,593

-9,5

 

8

8

ST Microelectronics

9,017

2,2

9,213

-2,1

 

9

9

Kioxia (Toshiba Memory)

8,797

2,1

8,533

-3,1

 

10

10

NXP

8,745

2,1

9,022

-3,1

 

Others (outside top 10)

189,169

45,2

195,713

-3,3

 

Total market

418,302

100,0

474,631

-11,9

 

According to Gartner, NAND flash experienced a milder 2019 downturn than the overall memory market, with a revenue decline of 23.1% due to elevated levels of inventory at the end of 2018 which were exacerbated by sluggish demand in the first half of 2019. The NAND market began to stabilize in July 2019. Gartner expects the recovery in NAND will continue in 2020 due to low supply bit growth being overwhelmed by strong demand from solid-state drive (SSD) adoption and the ramp up of 5G smartphones.

Gartner also noted that analog products declined 5.4% year over year due to weak industrial and automotive markets. Optoelectronics remained strong, due to strong camera sales for smartphones. Overall market conditions are projected to improve this year.

“In 2020, we expect to see semiconductor market revenue increase after the high inventory clearance to drive up the chip ASP, especially in the memory sector,” said Norwood. “The U.S.-China trade war seems to be easing as we move into 2020."

 

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