It took some time to gain momentum but the semiconductor market wound up bouncing back in 2016. Chipmakers generated $343.5 billion in sales last year, a 2.6 percent improvement over 2015 ($334.9 billion), according to Gartner. “The semiconductor industry rebounded in 2016, with a weak start to the year, characterized by inventory correction, giving way […]
It took some time to gain momentum but the semiconductor market wound up bouncing back in 2016.
Chipmakers generated $343.5 billion in sales last year, a 2.6 percent improvement over 2015 ($334.9 billion), according to Gartner. “The semiconductor industry rebounded in 2016, with a weak start to the year, characterized by inventory correction, giving way to strengthening demand and an improving pricing environment in the second half,” said Gardner research director James Hines in a statement.
Multiple factors helped semiconductor companies recover, added Hines. “Worldwide semiconductor revenue growth was supported by increasing production in many electronic equipment segments, improving NAND flash memory pricing and relatively benign currency movements.”
Intel remains the world’s leading chipmaker, with 15.7 percent of the market on revenue of over $54 billion. Second-place Samsung grabbed nearly 12 percent of the market with sales of $40 billion.
Mobile chip specialist Qualcomm hauled in $15.4 billion for a 4.5 percent share of the market and claimed third place from memory and solid-state storage provider SK Hynix, which held the spot in 2015 and dropped to fourth place in 2016. Broadcom, which was acquired by Singapore-based Avago, rounds out the top five with $13.2 billion in revenue.
A recent flurry of mergers and acquisitions (M&A) is having a significant effect on the industry, observed the research firm. Broadcom, for example, moved up 12 places after it was acquired for an estimated $37 billion in a deal that closed in February 2016.
“The combined revenue of the top 25 semiconductor vendors increased by 10.5 percent during 2016 and accounted for a 74.9 percent share, outperforming the rest of the market, which saw a 15.6 percent revenue decline. However, these results are skewed by the large amount of M&A activity during 2015 and 2016,” stated Hines.
“If we adjust for this M&A activity by adding the revenue of each acquired company to the revenue of the acquirer for both 2015 and 2016 where necessary, then the top 25 vendors would have experienced a 1.9 percent revenue increase, and the rest of the market would have increased by 4.6 percent,” Hines concluded.
Other buys affecting the industry include Western Digital’s purchase of SanDisk and On Semiconductor’s acquisition of Fairchild Semiconductor, noted Gartner.
As the dust settles, Gartner predicts that the chip market to rise 7 percent in 2017. Higher average selling prices for application-specific standard solutions and the Internet of Thing’s (IoT) insatiable appetite for silicon are expected to buoy the market this year.
Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.
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Pedro Hernandez is a contributor to Datamation, eWEEK, and the IT Business Edge Network, the network for technology professionals. Previously, he served as a managing editor for the Internet.com network of IT-related websites and as the Green IT curator for GigaOM Pro.
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