Memory prices boost Samsung to the top of the chip market, while the Internet of Things makes a ‘significant’ impact on revenues
Samsung has beaten Intel to the semiconductor industry’s top spot for the first time as a boom in the memory market saw the South Korean company’s memory revenues grow by $20 billion (£14.3bn) in 2017, according to Gartner.
The memory market alone grew by $50bn to $130bn, and Samsung, the world’s largest memory chip producer, saw the greatest benefit.
Samsung registered $59.9bn in overall semiconductor revenues, or 14.2 percent of the market, compared with Intel’s $58.7bn, with a 14 percent share.
The shift comes 25 years after Intel became the world’s top semiconductor maker in 1993, according to analyst firm IC Insights.
It took over the top spot from Japanese chip maker NEC, which had led the market since 1985. In 1990, six Japanese semiconductor companies were in the top 10, a figure that no country or region has matched since.
Worldwide revenue hit $420.4bn last year, up 21.6 percent from 2016, Gartner said, with revenues breaking the $400bn level for the first time.
“2017 saw two semiconductor industry milestones – revenue surpassed $400bn, and Intel, the No. 1 vendor for the last 25 years, was pushed into second place by Samsung Electronics,” said Gartner research director George Brocklehurst.
Both milestones were driven by undersupply in the memory market, which drove up prices for DRAM and NAND flash memory, Brocklehurst said.
South Korea’s Hynix was third, followed by Micron, Qualcomm and Broadcom. The combined revenues of the top 10 manufacturers increased by 30.6 percent in 2017 and accounted for 58 percent of the total market, with the rest of the market seeing only an 11 percent increase.
But Gartner said memory prices tend to follow a marked boom and bust cycle, with chip makers struggling to justify investments in commodity memory when the cycle turns down again.
As a result, the firm said it expects Samsung’s lead to be “short-lived”, and to “disappear when the memory market goes into its bust cycle”, which it expects to occur in late 2019.
‘Significant’ Internet of Things growth
Sales of non-memory semiconductors, an area less prone to large changes in demand, grew by $24.8bn to $290bn, with Texas Instruments, STMicroelectronics, Infineon and others seeing double-digit growth in the industrial and automotive industries.
2017 saw a slowdown in mergers and acquisitions in the area, with only half the number of deals compared to 2016 and the deals that did take place being worth half the value of those the previous year.
Avago holds the record for the biggest-ever acquisition in the sector after purchasing Broadcom for $37bn in 2016, before taking on the Broadcom name.
Qualcomm is expected to surpass that figure when it completes the acquisition of NXP Semiconductors for $44bn, pending a Chinese antitrust investigation.
The Internet of Things is beginning to show a “significant impact” on the broader semiconductor market, with chips for wireless connectivity growing 19.3 percent to $10bn in 2017.
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