Semiconductor sales revenue is expected to reach US$354 billion this year, a 4 percent increase over 2014. Currency shifts, excess inventory and sluggish growth in the PC upgrade cycle have forced a downward revision from the previous quarter’s forecast of 5.4 growth.
Recent and rapid depreciation in the value of global currencies relative to the US dollar coupled with excess inventories in the semiconductor and electronics supply chains and the end of a PC upgrade cycle drove the downward revision. Europe and Japan are predicted to show declines in large part due to the exchange rate between the US dollar, the Euro and the Yen.
The strong dollar is prompting system suppliers and system buyers to re-evaluate their strategies. System suppliers are raising prices in select regions like Europe to keep their margins in tact along with de-featuring some products in order to maintain current price points. System buyers are pushing out purchases in selected regions, extending product life cycles and buying down the price curve. This maneuvering naturally leads to reduced semi-conductor growth in 2015.
Smartphones, solid-state drives (SSDs) and ultramobiles are seeing the largest semiconductor growth while the traditional PC segment experiences the biggest decline.
DRAM, from a device standpoint, continues to be a primary growth driver of the overall industry. DRAM revenue is expected to increase 7.9 percent in 2015, down from a 32 percent increase in 2014. Some industry predictors say that DRAM growth will fall off dramatically in 2016 and 2017 with revenues declining 20.2 percent and 8.4 percent respectively. Optoelectronics and Analogue product sectors are expected to grow by 8.3 percent and 5.6 percent respectively.
Overall growth in the semiconductor market is predicted for 2016 and 2017, with forecasts that the market will be worth US$370 billion by 2017. The strongest growth region is forecasted to be the Asian Pacific which is expected to be worth US$216 billion by 2016 which will represent 60 percent of the total worldwide market.
The above figures mirror those released by the World Semiconductor Trade Statistics (WSTS) Organization which forecast sales of chips to be US$347 billion this year. But meeting these numbers after the worst sequential growth since 2009 was reported in the first quarter of this year will require a strong second-quarter. In order to achieve 4 percent annual growth after a 7 percent first quarter decline will require a strong second quarter bounce.