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DRAM shortage pushes semiconductor market growth

04 Apr 2014  | Kevin Fogarty

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The semiconductor market expanded 5 per cent globally to $315billion last year despite a sluggish smartphone market growth and a nearly 10 per cent decline in PC sales.

The $315billion figure, which Gartner reported Thursday, is almost $10billion higher than estimates published by the Semiconductor Industry Association (SIA) just a month ago.

However, Gartner analyst Andrew Norwood said in his report that, rather than showing the industry in glowing health, the numbers reveal inconsistencies and supply chain failures, especially among makers of memory chips. Their revenue rose 23.5 per cent due to short supplies and rising prices, rather than growing demand.

The shortage-driven cost of memory also helped create an enormous disparity among manufacturers, Norwood said. The 25 biggest semiconductor makers reported an average revenue increase of 6.9 per cent, compared with just 0.9 per cent for companies in the rest of the market. "Memory, and particularly DRAM, led this growth" and led to the disparity between companies at the top of the market and those at the bottom.

For example, a Sept. 4 fire that forced the temporary closure of a SK Hynix factory in Wuxi, China, helped drive 2GB DDR3 DRAM chip prices up 42 per cent by the end of September. For the full year, SK Hynix, the world's second-largest memory manufacturer, reported a 40.8 per cent revenue increase that put it among top five semiconductor makers in revenue for the first time. By contrast, Intel's revenue dropped 1 per cent due to weak PC sales, though it remains the market leader, and its revenue and market share are still almost half again that of No. 2 Samsung.

On Feb. 3, the SIA posted a slightly lower but still-record market figure of $305.6billion. In a press release, SIA president and CEO Brian Toohey said the year showed consistent, steady growth of 4.8 per cent "across nearly all regions and product categories," despite a December spike. For the full year, the market grew 7.7 per cent worldwide, 12.7 per cent in Europe, and 17.3 per cent in the United States.

In an update this week to the McClean Report issued in January, IC Insights said tablet and smartphone multi-processors will be the biggest-selling integrated circuits this year, followed by DRAM and NAND chips. However, the growing popularity of low-end smartphones will improve the results for comparatively small players, including MediaTek.

In a presentation on the report in January, IC Insights president Bill McClean said he believed a sluggish global economy will hold the numbers down. "This year looks pretty good, not great, but better than last year. Really good growth in this industry is double-digit. Anything else is just OK."




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