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Gartner Predicts 9.6% Decline in Semiconductor Revenues

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Gartner said this week that it expects global semiconductor revenues to decline by 9.6% year-over-year throughout 2019. The market is expected to bring in $429 billion in 2019, the analyst firm said, which is significantly less than semiconductor companies made last year.

The semiconductor market's struggles haven't exactly been kept a secret. We've known for over a year that Intel has failed to keep pace with demand for its processors, that DRAM prices are declining rapidly and that demand for NAND remains low. Semiconductor companies have also had to contend with various challenges that exacerbate their existing supply and demand problem.

"The semiconductor market is being impacted by a number of factors," Gartner senior principal research analyst Ben Lee said in a statement. "A weaker pricing environment for memory and some other chips types combined with the U.S.-China trade dispute and lower growth in major applications, including smartphones, servers and PCs, is driving the global semiconductor market to its lowest growth since 2009."

All of those factors have contributed to the semiconductor market's woes. Things might pick up in the short-term, as DRAMeXchange predicted this month that a Toshiba power outage and resulting export restrictions from Japan might drive up flash memory prices, but that rebound won't last long. Companies already have enough DRAM and NAND in their inventories to weather any supply-side issues with current levels of demand.

Gartner also said the dispute between the U.S. and China might have a lasting effect on the market. Some manufacturers will leave China to avoid U.S. tariffs, but the back-and-forth could also create an opportunity for Chinese manufacturers to develop their own processors, the analyst firm said.

According to Gartner, low demand will reduce DRAM prices by 42% this year. 

More information is available to Gartner clients via the company's "Semiconductor Forecast Database, Worldwide, 2Q19 Update" report.