Memory is driving 2017 boom

June 06, 2017 //By Peter Clarke
Memory is driving 2017 boom
Memory shipments and increased memory pricing is driving a semiconductor boom that could see 16 percent growth year-on-year, according to market research firm Semiconductor Intelligence.

The semiconductor market declined in the first quarter of 2017 by 0.4 percent compared with the 4Q16 (see Two-speed global chip market continues to run hot) but this decline was much less than is usual in the first quarter of any year. In the previous five years the 1Q/4Q decline has averaged 4 percent.

The relative strength in 1Q 2017 was driven by a strong memory market. The three largest memory companies – Samsung, SK Hynix and Micron Technology – grew their revenues in aggregate by 10 percent in 1Q17 compared with 4Q16. Excluding these three companies the semiconductor market declined 3.7 percent, which is in-line with recent seasonal trends.

And memory is also expected to drive 2Q17 growth over 1Q17.

Quarterly forecasts are out from most of the big chip companies. Micron Technology expects 16 percent growth in its fiscal quarter ending this month versus the prior quarter. Samsung and SK Hynix did not provide 2Q 2017 guidance, but both companies cited strong demand and healthy price trends for both DRAM and flash memory. With the exception of Intel – which is expecting a 2.7 percent decline – the top non-memory semiconductor companies have guided for healthy 2Q17 revenue growth.

The midpoint of the guidance from these companies, ranges from 2.3 percent from MediaTek to 5.0 percent from STMicroelectronics. The high-end guidance ranges from 4.5 percent from MediaTek to 11.6 percent from Qualcomm.

Chip market growth forecasts are edging higher. Source: Semiconductor Intelligence.

As a result the outlook for the full year has been lifted by a number of market watchers. Semiconductor Intelligence estimates 7.0 percent growth in 2018 based on moderating memory demand and stable economic trends and electronic equipment markets.

If 2017 does see double-digit percentage growth it will be the first such year since 32 percent in 2010 following a bust year. Memory booms are always followed by memory busts, usually dragging the overall semiconductor market negative. This is likely to happen in 2019 Semiconductor Intelligence said.

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Two-speed global chip market continues to run hot

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