Semiconductor Revenue Decline Precursor to Display Fallback?
Looking at the semiconductor sector, which is 3X the display industry, worldwide revenue is forecast to total $429 billion in 2019, a decline of 9.6% from $475 billion in 2018, according to Gartner, Inc., down from the previous quarter’s forecast of -3.4%.
The semiconductor industry is experiencing, weaker pricing for memory and some other chips types combined with the U.S.-China trade dispute and lower growth in major applications, including smartphones, servers and PCs. In a way, these are similar to the issues facing the display industry, weaker prices of large displays, falling demand for smartphones, tablets, notebooks and monitors.
A demand-driven oversupply in the DRAM market will push pricing down 42.1% in 2019 and the oversupply is expected to extend through the second quarter of 2020. The decline is due to signs of a slower demand recovery at the hyperscale vendors and the increasing inventory levels of DRAM vendors. This ends the longest period of undersupply seen in the DRAM industry. The global NAND market has been in oversupply since the first quarter of 2018 and is now more pronounced as the near-term demand for NAND is weaker than expected. Gartner said, “We expect that high smartphone inventory and sluggish solid-state array demand will last for a few more quarters. However, looking further out is concerning given slowing demand drivers, such as PCs and smartphones, and more capacity as new fabs in China impact the market.”