Worldwide semiconductor revenue totaled $418.3 billion in 2019, down 11.9% from 2018, according to preliminary results by Gartner, Inc. The report cites the drop in the memory market as the top reason for the decline. Sales analog products’ declined 5.4% while optoelectronics grew 2.4%.
“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. “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.”
“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 Mr. Norwood. “The U.S.-China trade war seems to be easing as we move into 2020. However, during 2019 the U.S. added several Chinese companies, including Huawei, to the Entity List restricting the sale of U.S. components. The immediate impact was to push Huawei into looking outside the U.S. for alternative silicon suppliers, with wholly owned HiSilicon at the top of the list as well as alternative suppliers based in Japan, Taiwan, South Korea and China. This will be an area to watch in 2020.”
