Global semiconductor revenues to fall 0.9% in 2020

Coronavirus decimates the previous forecast of 12.5% growth this year across memory and nonmemory segments

Worldwide semiconductor revenue is forecast to decline by 0.9% during 2020 due to the economic effects of the COVID-19 pandemic.

Expected revenue has been slashed from the previous quarter’s forecast by $55 billion (roughly £44 billion), falling from $470 billion to $415 billion (£334.3 billion), according to Gartner. This represents an overall decline in year-on-year revenues against 2019 figures.

Previous forecasts suggested the market would grow by 12.5% this year.

Despite a touted contraction, further examination shows that memory revenue is forecast to grow by 13.9%. This will save the market from a much sharper contraction, with an expected 6.1% drop in nonmemory semiconductor revenue.

“The wide spread of COVID-19 across the world and the resulting strong actions by governments to contain the spread will have a far more severe impact on demand than initially predicted,” said Gartner’s research practice vice president Richard Gordon. 

“This year’s forecast could have been worse, but growth in memory could prevent a steep decline.”

The memory market, which will comprise roughly 30% of all semiconductor sales in 2020, is forecast to reach $124.7 billion (£100.4 billion). The nonmemory revenue market, which is set to decline, meanwhile, will reach $290.6 billion (£234 billion) in 2020.

NAND flash revenue is expected to grow a staggering 40%, despite coronavirus disruption, due to severe shortages from the previous year. Demand is not expected to recede until later this year.

DRAM revenue, meanwhile, will decline by 2.4% this year. Strong demand from cloud service providers in the first half of this year will push and revenue higher in server DRAM, according to Gartner. This growth will be offset by weak demand and falling prices from the smartphone market, however.

The reduction in demand among smartphone manufacturers will also be true for companies in the automotive and consumer electronics segments too. 

This is against a continued demand among the hyperscale data centre and communications infrastructure sectors in order to ensure services continue to be resilient to support increased remote working and online availability.

The ongoing coronavirus pandemic has affected the tech industry to varying degrees, from delaying major events to affecting supply chains and manufacturing processes. 

Sony, for example, last month revealed the extent to which the pandemic has disrupted its business, with the Japanese tech giant closing plants in Wales and Malaysia, as well as closing offices in Europe and the US.

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