DRAM, son. Semiconductor revenue fell 12% last year. At least 2020 will be better, right? Right?

DRAM and NAND struggle with swollen inventories and low demand – Gartner


Famed entrails poker Gartner has pegged revenue decline in the 2019 semiconductor market at 12 per cent to $419.14bn (£335.2bn), thanks to a supply glut of DRAM chips and turmoil in the NAND flash sector.

Overall, memory is estimated to account for 26.1 per cent of all semiconductor sales in 2019. It was also, per Gartner, the weakest overall component of the semiconductor market.

The gloomiest figures come from the DRAM sector, which was down a colossal 32.7 per cent. NAND struggled too, with a sales contraction of 26.4 per cent. Gartner blames this on swollen inventory levels at the end of 2018, paired with sluggish demand at the end of the calendar year from smartphone and hyperscale cloud clients.

That, in itself, isn't too surprising. Last year was fairly rough for the mobile industry, with sales declining in Q1 and Q2. Things picked up slightly in the Q3, according to Canalys figures, with an overall growth of 1 per cent, but again returned to its previous downward trajectory in Q4.

The fortunes of NAND recovered slightly towards the end of the year, when a power outage in a fabrication facility jointly owned by Western Digital and Kioxia (the artist formerly known as Tosh Memory Corp) temporarily reduced output, and subsequently inventory levels. This upward trend will continue into 2020, with NAND flash revenue expected to grow 40 per cent this year, largely due to pre-existing orders from hyperscale cloud clients.

"Companies are still paying the prices they negotiated for the first quarter, and, in fact, for the second quarter," Gartner analyst Richard Gordon told The Reg last week. "Essentially, we've got half of the year where pricing has been locked in."

The rest of the industry is expected to take a battering this year, however, with semiconductor revenue expected to drop 0.9 per cent due to the impact of COVID-19, with non-memory products the most acutely affected, dropping 6.1 per cent. ®


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