Chip sales declined by nearly 14% in the first half of 2019, the biggest drop since 2009, IHS Markit reported on Tuesday.
In some cases, major chip suppliers suffered their worst revenue declines in a decade. The IHS numbers matched results reported by other industry groups, adding to widespread concern that chip manufacturing and some other manufacturing in the U.S. are in a recession due to two successive quarters of negative revenue growth.
Global semi revenue in the first half reached $208.7 billion, down from $236.6 billion for the first half of 2018, a decline of 13.9%, IHS Markit said. In the first half of 2009, at the start of the Great Recession, the chip market declined by 26%.
Every region and almost every chip product category and application market suffered declines in the first half of 2019. Nine of the top 10 chip suppliers and 17 of the top 20 suppliers saw revenue drops during the period, noted Ron Ellwanger, senior research analyst at IHS Markit.
SK Hynix suffered the biggest loss in the first half, revenue down by 34.7%. Samsung was second worst at 33.4% down. Micron was third worst at 29.2% down.
All three were hurt by the drop in memory sales, which were down by 36.4%. DRAM and NAND flash dropped by 35.7% and 29.6% respectively. The overall cause of the decline can be attributed to a 19.5% decline in data processing which was in turn due to a decline in expansion of the cloud, data centers and enterprise servers and soft demand for cell phones, Ellwanger said.
Others: Nvidia revenue dropped by 20.6%; Qualcomm dropped by 10.5%; Intel, the market leader, declined by only 1.7%, posting strong results in wireless and industrial markets.
Other than memory market downward trends, microcomponents were down 4.2%; logic ICs were down 4.8%; analog IC’s were down 6.1%; discretes were down by 1.9% and sensors and actuators fell by 2%. Only optical grew slightly, up less than 1%.
In terms of application market declines, IHS Markit said data processing fell by 21.9%; wireless communications declined by 15.6%; industrial electronics fell by 8.6%; automotive fell by 4.4% and wired communications fell by 0.3%.
The Americas saw revenue decline by 20%, compared to 14.4% down for Asia-Pacific, 13.3% down for Japan and 12.6% down for Europe. North America saw the biggest impact from the downturn in data processing and handset markets, which affected memory demand.
Sequentially, the second quarter of 2019 was up by 1% over the first quarter. IHS Markit forecasts 6% sequential growth in the third quarter. However, the third quarter of 2019 will still be down by 17% over the third quarter of 2018, putting the entire year of 2019 on a course to the be the worst semi market in a decade.
IHS Markit makes its data available to subscribers in its Competitive Landscaping Tool. It covers 142 product segments and the performance of 272 companies.