Chip Market to Rise More Than 7% in 2017

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In a revised forecast, Gartner expects the world’s semiconductor companies to rake in $364.1 billion this year, a 7.2 percent increase and a $14.1 billion bump from earlier estimates.

Coming off a year that saw meager growth (growth of 1.5 percent in 2016), Gartner research vice president Ganesh Ramamoorthy expects the industry to stage a turnaround in 2017, due in part to increased demand for higher-priced memory chips. “Memory market supply and demand have turned positive for memory vendors who are pushing ASPs [average selling prices] higher to recover margins,” he said in a statement.

“ASP increases for application-specific standard products (ASSP), discrete and analog chips and higher semiconductor content in key applications including the Internet of Things (IoT) were the other key drivers for revenue increases,” continued Ramamoorthy.

Chipmakers earned $339.7 billion in revenues in 2016, a year that also marked a big milestone for Intel. The Santa Clara, Calif.-based processor manufacturer had retained the number one spot for 25 consecutive years, followed by Samsung Electronics, which had held on to second place for 15 years.

Broadcom, having been acquired by Avago in early 2016, climbed 11 places to land in fifth place. Qualcomm and SK Hynix ranked third and fourth, respectively.

Compared to the choppy growth experienced last year, due to swings in DRAM and NAND supply among other factors, 2017 is expected to exhibit broader and more consistent growth patterns. But with cooling PC and tablet demand, chipmakers are advised to seek out other faster-growing opportunities.

Ramamoorthy suggest that “product managers who have depended upon these categories must now continue to look for adjacent opportunities in new emerging applications in the IoT and in areas like industrial, storage and automotive markets.”

IoT-related spending is on the rise, particularly on the device side.

Earlier this month, IDC forecast that IoT hardware spending would reach $400 billion by 2020. Combined with service, software and connectivity solutions, the IoT investments are expected to total $1.29 trillion by the same year, compared to an estimated $737 billion in 2016.

Gartner predicts there will by 20.8 billion connected devices pouring data into the IoT by 2020. Taking a more bullish stance, computer networking giant Cisco believes the number of IoT devices reach 50 billion.

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.