Global semi market set for strong growth
Worldwide semiconductor market revenue is on track to achieve a 9.4 percent expansion this year, with broad-based growth across multiple chip segments driving the best industry performance since 2010.
Global revenue in 2014 is expected to total $353.2 billion, up from $322.8 billion in 2013, according to a preliminary estimate from IHS Technology, El Segundo CA. The nearly double-digit-percentage increase follows respectable growth of 6.4 percent in 2013, a decline of more than 2.0 percent in 2012 and a marginal increase of 1.0 percent in 2011. The performance in 2014 represents the highest rate of annual growth since the 33 percent boom of 2010.
“This is the healthiest the semiconductor business has been in many years, not only in light of the overall growth, but also because of the broad-based nature of the market expansion,” said Dale Ford, vice president and chief analyst at IHS Technology. “While the upswing in 2013 was almost entirely driven by growth in a few specific memory segments, the rise in 2014 is built on a widespread increase in demand for a variety of different types of chips. Because of this, nearly all semiconductor suppliers can enjoy good cheer as they enter the 2014 holiday season.”
Of the 28 key sub-segments of the semiconductor market tracked by IHS, 22 are expected to expand in 2014. In contrast, only 12 sub-segments of the semiconductor industry grew in 2013. Last year, the key drivers of the growth of the semiconductor market were dynamic random access memory (DRAM) and data flash memory. These two memory segments together grew by more than 30 percent while the rest of the market only expanded by 1.5 percent.
This year, the combined revenue for DRAM and data flash memory is projected to rise about 20 percent. However, growth in the rest of the market will swell by 6.7 percent to support the overall market increase of 9.4 percent. In 2013, only eight semiconductor sub-segments grew by 5 percent or more and only three achieved double-digit growth. In 2014, over half of all the sub-segments—i.e., 15—will grow by more than 5 percent and eight markets will grow by double-digit percentages.
This pervasive growth is delivering general benefits to semiconductor suppliers, with 70 percent of chipmakers expected to enjoy revenue growth this year, up from 53 percent in 2013. The attached figure presents the growth of the DRAM and data flash segments compared to the rest of the semiconductor market in 2013 and 2014.
The two market segments enjoying the strongest and most consistent growth in the last two years are DRAM and light-emitting diodes (LEDs). DRAM revenue will climb 33 percent for two years in a row in 2013 and 2014. This follows often strong declines in DRAM revenue in five of the last six years. The LED market is expected to grow by more than 11 percent in 2014. This continues an unbroken period of growth for LED revenues stretching back at least 13 years.
Major turnarounds are occurring in the analog, discrete and microprocessor markets as they will swing from declines to strong growth in every sub-segment. Most segments will see their growth improve by more than 10 percent, compared to the declines experienced in 2013. Furthermore, programmable logic device (PLD) and digital signal processor (DSP) application-specific integrated circuits (ASICs) will experience dramatic improvements in growth. PLD revenue in 2014 will grow by 10.2 percent compared to 2.1 percent in 2013, and DSP ASICs will rise by 3.8 percent compared to a 31.9 percent collapse in 2013.