Sales turn positive in 2020 due to increase in semiconductor chip ASP
Intel Surpasses Samsung Electronics to Take First Place in Supply Sales in Two Years

The memory market slump continued in 2019, with global semiconductor sales declining 11.9% year-on-year.

In 2020, semiconductor sales are expected to turn positive as semiconductor chip ASPs (average selling prices) increase.
According to preliminary results of the 2019 worldwide semiconductor revenue survey released by Gartner on January 15, global semiconductor revenue in 2019 recorded $418.3 billion, an 11.9% decrease from 2018.

Due to the slump in the memory market, Samsung Electronics, which had maintained the top spot in global semiconductor supply sales from 2017 to 2018, lost its ranking to Intel in just two years.

Intel sold its cellular modem business to Apple in the fourth quarter in response to a slump in the server market and continued CPU supply constraints in 2019, which led to a 0.7% decline in semiconductor revenue.

Samsung Electronics has been struggling due to oversupply and falling prices in the DRAM and NAND flash markets, and memory sales, which accounted for 82% of total sales, fell to 34% in 2019.
“The memory market, which accounted for 26.7% of semiconductor sales in 2019, saw revenue decline by 31.5%,” said Andrew Norwood, vice president and analyst at Gartner. “Within the memory segment, DRAM revenue declined by 37.5% due to oversupply from the end of 2018 to 2019.” “In the second half of 2019, excessive inventory at DRAM suppliers caused semiconductor prices to fall, and ASP fell by 47.4% in 2019.”

“The oversupply is due to the sharp drop in demand in the hyperscale market,” he added, “which shows the reality of OEMs having excessive inventory.”

NAND flash saw a modest decline in the overall memory market last year. NAND flash revenue fell 23.1% as inventory buildup at the end of 2018 exacerbated weak demand in the first half of 2019.

The NAND market began to stabilize in July 2019, which is believed to have been helped by a power outage at a factory jointly owned by Kioxia and Western Digital. The power outage prompted suppliers to clear out inventory, which in turn drove up NAND flash prices.

Gartner expects the recovery in NAND flash prices to continue in 2020 due to low supply bit growth (the rate at which production in bits increases) caused by increased SSD adoption and demand for 5G smartphones.
“In 2020, chip ASPs are expected to rise as excess inventory issues are resolved, which will ultimately lead to increased semiconductor market revenue, especially in the memory sector,” said Norwood, vice president at Gartner. “Although the US-China trade war appeared to be easing in 2020, the US added several Chinese companies, including Huawei, to the Entity List in 2019, restricting the sale of US components.”

He continued, “Huawei has sought alternative suppliers headquartered in Japan, Taiwan, Korea, and China, as well as its subsidiary HiSilicon, in order to secure silicon suppliers that can replace U.S. companies,” adding, “The movements of the U.S. and Huawei will continue to be something to watch in 2020.”