In January Gartner was forecasting 2017 would be a 7.2 percent growth year and before that a 4.1 percent growth year.
Gartner is in rough agreement with rival analysis firm IC Insights, which recently raised its 2017 growth forecast to 11 percent, up from 5 percent, on a jump in DRAM and NAND flash average selling prices (see Rising memory prices lift chip market outlook ).
Gartner said that accelerating demand for commodity memory had raised the outlook for both 2017 and 2018. In addition, unit production estimates for premium smartphones, graphics cards, video game consoles and automotive applications have improved and contributed to the stronger outlook for 2017.
However, the addition of manufacturing capacity in both DRAM and NAND flash memory is expected to bring about an oversupply and a collapse in average selling prices (ASPs) and market value in 2019.
Gartner said that a 4Gbyte PC DRAM module that cost $12.50 in mid-2016 is now priced at just under $25. Pricing for both DRAM and NAND is expected to peak in 2Q17 but content increases in applications such as smartphones being introduced later in the year are expected to keep ASPs high.
"With memory vendors expanding their margins though 2017, the temptation will be to add new capacity. We also expect to see China make a concerted effort to join the memory industry, setting the market up for a downturn in 2019," said Jon Erensen, research director at Gartner, in a statement.
"The outlook for emerging opportunities for semiconductors in the Internet of Things (IoT) and wearable electronics remains choppy with these markets still in the early stages of development and too small to have a significant impact on overall semiconductor revenue growth in 2017," said Erensen.
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