Industrial semis shine a bright light in overall chip recession

Loihi chips
While 2019 industrial semi sales will drop 1%, that's much better than the expected overall industry decline. (Intel)

Industrial semiconductor demand is expected to decline about 1.2% for all of 2019, far better than the overall semiconductor industry.

In 2018, industrial semi revenues were up by 10.8%, reaching $52 billion. They will continue to grow at an annual rate of 5.8% through 2023 even accounting for the 2019 decline, according to IHS Markit. The firm’s estimate for all of 2019 is that the market will reach $51.4 billion, down 1.2% from 2018.

Several broad estimates for the overall semi market expect 2019 to be a down year, by as much as 10% or more. Some U.S. chipmakers have described revenues as hitting bottom in 2019, including Broadcom in a recent quarterly conference call.

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In early September, IHS Markit noted that chip sales overall were down nearly 14% for the first half of 2019. Gartner has released an estimate of an annual decline for all of 2019 of 10%.

RELATED: Chip sales decline 13.9% in first half of 2019, IHS Markit says

Despite the 2019 forecasts, 2018 was a “stellar” year for general purpose analog ICs and optical semiconductors, said Noman Akhtar, an IHS analyst.

Sales in those areas benefited from the continued strength of the general LED lighting market and other industrial segments, including factory automation, power and energy and power discretes, Akhtar said. Demand was high in 2018 for industrial motor drivers, electric vehicle chargers, PV inverters, traction and commercial lighting equipment.

Microcontrollers for industrial apps are projected to experience broad-based growth in the long term, IHS added.

Several major companies did well in 2018 in selling industrial semiconductors, including Texas Instruments, the top performer by far with about $5.5 billion in sales. The remaining top four in order were Analog Devices at $3.1 billion, Infineon Technologies at nearly $3 billion, STMicroelectronics at $2.8 billion and Intel at $2.6 billion.

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