Gartner Says Worldwide Semiconductor Revenue to Decline 9.6% in 2019

DRAM Pricing to Decline 42% in 2019 Due to Demand-Driven Oversupply

July 22, 2019 -- Worldwide semiconductor revenue is forecast to total $429 billion in 2019, a decline of 9.6% from $475 billion in 2018, according to Gartner, Inc. This is down from the previous quarter’s forecast of -3.4%.

“The semiconductor market is being impacted by a number of factors. A weaker pricing environment for memory and some other chips types combined with the U.S.-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,” said  Ben Lee, senior principal research analyst at Gartner. “Semiconductor product managers should review production and investment plans to protect themselves from this weaker market.”

A demand-driven oversupply in the DRAM market will push pricing down 42.1% in 2019 and the oversupply is expected to extend through the second quarter of 2020. The decline is due to signs of a slower demand recovery at the hyperscale vendors and the increasing inventory levels of DRAM vendors. This ends the longest period of undersupply seen in the DRAM industry.

The ongoing dispute between the U.S. and China is causing uncertainty over trade rates. U.S.-imposed restrictions on Chinese businesses are based on security concerns and will have a longer-term impact on semiconductor supply and demand. These combined issues will accelerate China’s domestic semiconductor production, as well as create local forks of technologies such as ARM processors. Some manufacturing will relocate outside China during the dispute and many companies will seek to diversify their manufacturing base to reduce any further disruption.

The global NAND market has been in oversupply since the first quarter of 2018 and is now more pronounced as the near-term demand for NAND is weaker than expected.

“We expect that high smartphone inventory and sluggish solid-state array demand will last for a few more quarters,” said Mr. Lee. “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.” 

Gartner clients can read more in the report,  “Semiconductor Forecast Database, Worldwide, 2Q19 Update.”

Additional analysis on what is driving the future of the IT industry will be presented during  Gartner IT Symposium/Xpo 2019, the world’s most important gathering of CIOs and other senior IT executives. IT executives rely on these events to gain insight into how their organizations can use IT to overcome business challenges and improve operational efficiency. Follow news and updates from the events on Twitter using  #GartnerSYM.

Upcoming dates and locations for Gartner IT Symposium/Xpo include:

September 16-18: Cape Town, South Africa

October 20-24: Orlando

October 28-31: Gold Coast, Australia

October 28-31: Sao Paulo, Brazil

November 3-7: Barcelona

November 11-14: Goa

November 12-14: Tokyo

About Gartner

Gartner, Inc. (NYSE: IT), is the world’s leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities today and build the successful organizations of tomorrow.

Our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We are a trusted advisor and objective resource for more than 15,000 organizations in more than 100 countries — across all major functions, in every industry and enterprise size.

To learn more about how we help decision makers fuel the future of business, visit  gartner.com.




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