Warning sign for the Semiconductor Industry
24 May, 2016
Is winter coming? Semiconductors sales dropped 7% during the first quarter of 2016. IDC Research analysis forecast flat market a few years ahead
Is winter coming? Semiconductors sales dropped 7% during the first quarter of 2016. IDC Research forecast flat market a few years ahead
Following the recent stream of quarterly reports, now it is a good timing to examine the general mood of the semiconductors industry. According to IC Insights, its a bleak mood. The Research firm IC Insights accumulated the financial data published by the 20 leading companies in the global semiconductor industry and found out that their the total sales dropped by 6% in Q1 2016 compared to the same quarter in 2015, one point less than the total worldwide semiconductor industry decline of 7%.
Only 5 companies saw an increase in sales compared to Q1 2015: Intel ((%), Infineon (7%), MediaTek (12%), Appel (10%) and NVidia (15%). Seven companies saw a double digit decline in sales and three companies reported a sharper decline of 25% and more: Qualcomm (-25%), Micron (-28%) and SK Hynix (30%) led the downward trend.
NVidia reported the biggest quarterly growth in a yearly perspective, growing by 15% in Q1 2016. Intel stands on the top of the list with revenues of $13.1 billion, a 9% increase compared to same quarter last year. Eight of the leading companies are from the US, 3 from Japan, 3 from Taiwan, 3 from Europe, 3 from South Korea and one from Singapore.
Future prospects remain dim
According to IDC Research, the decline of the semiconductor industry is expected to continue. The group expects the global semiconductor market to shrink by 2.3% to $324 billion in 2016 due to the economic downtrend in china and in other emerging markets. The group forecasts slow growth in years to come – by 2020, the global semiconductor market is expected to grow by and average rate of 1.9% per year to $364 billion.
The Semiconductor industry certainly drew lots of attention this season due to increasing signs of an ongoing slump. The downward trend is fueled by the increasing difficulties in the mobile market, the decline in PC sales and the price reduction in the DRAM sector.
The mobile market is expected to grow further, albeit, in a slower rate of 8%, compared to a staggering 52.5% in 2015. The virtual crash in DRAM and NAND pricing is expected to hamper the semiconductor industry further. If we were to exclude the memory sector from the yearly data, the industry would grow, according to IDC, by 1.7%.
The PC market continues to shrink. It is expected to decrease by 6.2% in 2016 and by an average of -0.9% per year until 2020. The smart car sector is a ray of light amidst these dim prospects – analysts predict a steady growth in demand as this field matures and expands.