Gartner Forecasts 12.3% Growth in Global Semiconductor Revenue in 2017
Factors of market instability also exist due to parts supply shortages and rising raw material prices.

Gartner Inc. projected that global semiconductor sales in 2017 would reach $386 billion, an increase of 12.3% from the previous year.

In the second half of 2016, the market showed strong performance with growth momentum centered on general-purpose memory, leading to upward revisions in the outlook for 2017 and 2018. However, due to the volatility of the memory market and the increase in production volume of DRAM and NAND flash memory, these forecasts are expected to be revised in 2019.

“The outlook for the overall semiconductor market will be revised upward due to price increases in DRAM and NAND flash memory,” said Jon Erensen, a principal research analyst at Gartner. “At the same time, system suppliers for smartphones, PCs, and servers will face pressure on profits,” he said, adding that “the semiconductor market will become unstable in 2017 and 2018 due to component supply shortages, rising raw material prices, and the resulting increase in average selling prices (ASP).”

Samsung Electronics unveiled a next-generation V-NAND solution at the 'Flash Memory Summit 2016' last August and presented new possibilities for flash memory.

PC DRAM prices have nearly doubled since mid-2016. 4GB modules, which averaged only $12.50, have now surged to just under $25. The average selling price of NAND flash was found to have increased consecutively in the second half of 2016 and the first quarter of 2017. Although the prices of both DRAM and NAND are expected to reach their peak in the second quarter of 2017, it is predicted that prices will be difficult to stabilize until the end of the year as companies engage in fierce competition over supply due to the increase in content for major applications such as smartphones.

Researcher John Erensen said, “The biggest concern for memory suppliers looking to increase profits in 2017 will be expanding production capacity,” adding, “In addition, as China struggles to enter the memory market, we expect the semiconductor market to enter a downturn driven by supply incentives in 2019.”

The market outlook for 2017 is expected to be even brighter as production forecasts for premium smartphones, graphics cards, video game consoles, and automotive applications are being revised upward. Additionally, semiconductor revenue estimates have also increased due to electronic devices that rely heavily on DRAM and NAND flash. These include PCs, ultra-mobile devices, servers, and Solid State Drives (SSDs).

Researcher John Erensen predicted, “Since semiconductors for the Internet of Things (IoT) and wearable devices are still in the early stages of development, the outlook for new opportunities remains unstable. Furthermore, because their share is insignificant, they will not have a major impact on the overall semiconductor sales growth in 2017.”