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07 November 2019

Semiconductors back to growth in 2020

The global semiconductor market is headed for the largest decline in 18 years. The market dropped 32% in 2001 when the Internet bubble burst. The 2019 decline should be around 15%, the third largest annual drop after 2001 and a 17% drop in 1985. The current is largely due to excess memory capacity (DRAM and NAND flash) relative to demand. WSTS expects the memory market will decline 31% in 2019 while semiconductors excluding memory will decline only 4%. The market weakness is also due to an uncertain global economy and weakness in key demand drivers.
The second half of 2019 is showing signs of a turnaround. The non-memory companies showed revenue growth in 2Q 2019 versus 1Q 2019, ranging from 0.3% from Qualcomm to 16.2% from Nvidia. The memory companies (SK Hynix, Micron and Toshiba) experienced revenue declines, except for Samsung which grew 11.2%. A few companies expect healthy growth in 3Q 2019 revenues, ranging from 9.1% from Intel to 15.3% from STMicroelectronics. TI, Infineon and NXP project low single digit growth. Micron and Qualcomm expect revenue declines.

Recent semiconductor market forecasts call for 2019 to decline about 13% to 15%. Forecasts for 2020 are in a relatively narrow range, from 4.8% by WSTS to 8% by Semiconductor Intelligence. For 2021, IHS Markit projects accelerating growth to 10% from 6% in 2020.  Semiconductor Intelligence forecast is for slightly slower growth in 2021 of 7% compared to 8% in 2020.

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