Beancounters at analyst firm Gartner have added up some numbers and divided them by their collective shoe sizes and predicted a 9.6 percent decline in worldwide semiconductor revenue in 2019.
Big G said that the market will fall to $429 billion from the $475 billion recorded last year.
The drop means OEMs and hardware suppliers in the channel will see demand-driven oversupply in the DRAM market that will slash pricing down by 42.1 percent. All this will last until the second quarter of 2020.
Gartner said the decline was due to slower demand from hyperscale vendors and the increasing inventory levels of DRAM vendors. It also ends the longest period of undersupply seen in the DRAM industry
Gartner senior principal research analyst Ben Lee said: “A weaker pricing environment for memory and some other chips types combined with the US-China trade dispute and lower growth in major applications, including smartphones, servers and PCs, is driving the global semiconductor market to its lowest growth since 2009. Semiconductor product managers should review production and investment plans to protect themselves from this weaker market.”
The ongoing dispute between the US and China continues to cause uncertainty over trade rates, with US-imposed restrictions on Chinese businesses set to have a longer-term impact on semiconductor supply and demand.
Lee said that these combined factors have been tipped to accelerate China’s domestic semiconductor production, as well as create local forks of technologies such as ARM processors.
Some manufacturing will also relocate outside of China while the dispute continues and many countries will diversify their manufacturing base to reduce any further disruption, Gartner explained.
“The global NAND market has also been in oversupply since the first quarter of 2018 and is now more pronounced due to weaker-than-expected near-term demand for NAND. We expect that high smartphone inventory and sluggish solid-state array demand will last for a few more quarters. Given the aggressive price declines for NAND, it is possible to see a more balanced supply/demand outlook in 2020.
“However, looking further out is concerning given slowing demand drivers, such as PCs and smartphones, and more capacity as new fabs in China impact the market.”
