The cyclical semiconductor business has seen a steep fall in calendar year 2019, dragged by fall of demand in the memory products market. Global semiconductor revenue fell by 11.9 per cent to close at $418 billion.

Of the overall semiconductor revenues, the memory products segment witnessed a decline of 31.5 per cent. This segment accounts for about a quarter of the overall semiconductor business.

According to Andrew Norwood, Research Vice President at Gartner, oversupply caused a fall of 37.5 per cent in the sales of DRAM (Dynamic Random Access Memory) within the memory products business.

The oversupply situation started at the end of 2018 and lasted throughout 2019.

A sudden fall in demand from the hyper-scale market led to the oversupply. Excessive inventory at DRAM vendors in the second half of 2019 pushed pricing lower, resulting in an average selling price (ASP) decline of 47.4 per cent in 2019.

Intel leads

Chip maker Intel regained the top slot in the market as the downturn in the memory products market negatively impacted several top vendors such as Samsung Electronics, the No. 1 vendor by revenue in 2018 and 2017.

Intel’s semiconductor revenue declined 0.7 per cent in 2019, driven by a slowdown in the server market. Samsung dropped to the No. 2 position due to the downturn in the memory products market.

Samsung’s memory products revenue, which accounted for 82 per cent of its sales, declined 34 per cent in 2019.

“In 2020, we expect to see semiconductor market revenue increase after the high inventory clearance to drive up the chip ASP, especially in the memory sector,” he said.

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