Worldwide semiconductor revenue grew 22.2% in 2017

Thursday, January 4th, 2018 
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Gartner Says Worldwide Semiconductor Revenue Grew 22.2 Percent in 2017; Samsung Takes Over No. 1 Position

STAMFORD, Conn. — Worldwide semiconductor revenue totalled $419.7 billion in 2017, a 22.2 percent increase from 2016, according to preliminary results by Gartner, Inc. Undersupply helped drive 64 percent revenue growth in the memory market, which accounted for 31 percent of total semiconductor revenue in 2017.

“The largest memory supplier, Samsung Electronics, gained the most market share and took the No. 1 position from Intel — the first time Intel has been toppled since 1992,” said Andrew Norwood, research vice president at Gartner. “Memory accounted for more than two-thirds of all semiconductor revenue growth in 2017, and became the largest semiconductor category.”

The key driver behind the booming memory revenue was higher prices due to a supply shortage. NAND flash prices increased year over year for the first time ever, up 17 percent, while DRAM prices rose 44 percent.

Equipment companies could not absorb these price increases so passed them onto consumers, making everything from PCs to smartphones more expensive in 2017.

Other major memory vendors, including SK Hynix and Micron Technology, also performed strongly in 2017 and rose in the rankings (see Table 1).

Table 1. Top 10 Semiconductor Vendors by Revenue, Worldwide, 2017 (Millions of U.S. Dollars)

2017  2016                          2017  2017 Market     2016  2016-2017
Rank  Rank  Vendor               Revenue    Share (%)  Revenue  Growth (%)
----  ----  -------------------  -------  -----------  -------  ----------
1     2     Samsung Electronics   61,215         14.6   40,104        52.6
2     1     Intel Corporation     57,712         13.8   54,091         6.7
3     4     SK Hynix              26,309          6.3   14,700        79.0
4     6     Micron Technology     23,062          5.5   12,950        78.1
5     3     Qualcomm              17,063          4.1   15,415        10.7
6     5     Broadcom              15,490          3.7   13,223        17.1
7     7     Texas Instruments     13,806          3.3   11,901        16.0
8     8     Toshiba               12,813          3.1    9,918        29.2
9     17    Western Digital        9,181          2.2    4,170       120.2
10    9     NXP                    8,651          2.1    9,306        -7.0
            Others               174,418         41.6  157,736        10.6
                                 -------  -----------  -------  ----------
            Total Market         419,720        100.0  343,514        22.2

Source: Gartner (January 2018)

Second-placed Intel grew its revenue 6.7 percent in 2017, driven by 6 percent growth in data center processor revenue due to demand from cloud and communications service providers. Intel’s PC processor revenue grew more slowly at 1.9 percent, but average PC prices are on the rise again after years of decline following the market’s shift from traditional desktops toward two-in-one and ultramobile devices.

The current rankings may not last long, however, “Samsung’s lead is literally built on sand, in the form of memory silicon,” said Mr. Norwood. “Memory pricing will weaken in 2018, initially for NAND flash and then DRAM in 2019 as China increases its memory production capacity. We then expect Samsung to lose a lot of the revenue gains it has made.”

2017 was a relatively quiet year for mergers and acquisitions. Qualcomm’s acquisition of NXP was one big deal that was expected to close in 2017, but did not. Qualcomm still plans to complete the deal in 2018, but this has now been complicated by Broadcom’s attempted takeover of Qualcomm.

“The combined revenues of Broadcom, Qualcomm and NXP were $41.2 billion in 2017 — a total beaten only by Samsung and Intel,” said Mr. Norwood. “If Broadcom can finalize this double acquisition and Samsung’s memory revenue falls as forecast, then Samsung could slip to third place during the next memory downturn in 2019.”

Gartner clients can get more information in “Market Share Analysis: Semiconductor Revenue, Worldwide, Preliminary 2017 Estimates.”

Links: Gartner