Gartner Cuts 2015 Forecast of Global Semiconductor Sales Growth

Gartner Inc., recognized as a world leading market consultancy, forecasts global semiconductor revenue to increase 4 percent year on year, to US$354 billion by 2015, down 5.4 percent in growth it had projected in the first quarter.

Gartner's research vice president Bryan Lewis attributes such downbeat forecast to the rapid depreciation of various global currencies relative to the U.S. dollar, excess inventories in the semiconductor and electronics supply chains, and the end of a PC upgrade or replacement cycle, and that these three factors combine to create significant headwind for the semiconductor market in 2015.

The recently strengthening greenback is causing system suppliers and system buyers to re-evaluate their strategies. System suppliers will raise prices in select regions such as Europe to keep margins intact as well as some features in products to maintain current price points. System buyers will push out purchases in select regions, extending product life cycles as well as buying down the price curve. Lewis says that the said factors lead to reduced semiconductor growth in 2015.

From an application point of view, smartphones, solid-state drives (SSDs) and ultramobiles will see the largest semiconductor growth, while the traditional PC segment will experience the greatest decline, according to Gartner.

The termination of support for Windows XP, which was supposed to lift the replacement demand for traditional PCs and particularly in the professional market, waned in late 2014. Through 2015 the replacement demand is expected to remain muted, as consumers delay migrating to Windows 10, Gartner forecasts.

The next critical season for the PC and ultramobile markets is the third quarter of 2015, when Windows 10 and Intel's Skylake products come to market.

From a device point of view, DRAM continues to be one of the primary growth drivers of the overall industry. DRAM revenue is expected to increase 7.9 percent in 2015, following a 32 percent increase in 2014. However, Gartner maintains its grim forecast of the DRAM sector, whose sound state will come to an end in 2016 and 2017 when the DRAM industry revenue will likely decline 20.2 percent and 8.4 percent, respectively.

While such forecast may seem like dire, it is actually slightly better than the previous quarter's forecast for 2016 and 2017 declines of 30.1 percent and 20.0 percent, respectively, says Lewis.

Lewis says 2015 semiconductor growth hinges on the strength of the second-quarter bounce, and that the second quarter is traditionally when people see strong sequential growth coming off the traditionally negative first quarter as inventory is burned off from the holidays.

First quarter 2015 looks to have the worst sequential growth since 2009 with at least a 7 percent decline, so a strong second-quarter bounce is needed to achieve the 4 percent annual growth predicted for 2015, the Gartner executive says. (KL)

Gartner's forecasts of global semiconductor revenue

Year	2010	2011	2012	2013	2014	2015
Revenue	US$299bn	US$307bn	US$300bn	US$315bn	US$340bn	US$354bn
YoY change (%)	+31.1	+2.7	-2.3	+5.0	+7.9	+4.0

Source: Gartner