IDC: Memory is Holding Back Chip Market

Worldwide semiconductor revenue will fall for the second consecutive year in 2016, to $324 billion: a 2.3% YoY decrease. The forecast comes from IDC, which also expects semiconductor revenues to log a CAGR of 1.9% between 2015 and 2020, ending the period at $364 billion.

Global semiconductor demand will be affected by a softening of the overall outlook in the USA and an economic ‘pause’ in China and emerging markets. There will be some bright spots: namely the automotive sector and select portions of the consumer market, as well as LTE mobile phones (expected to rise 8% this year, although significantly down from the 52.5% growth seen in 2015).

“As both government regulations and consumers demand more features,” said IDC’s Nina Turner, “the key drivers of electrification, connectivity, and infotainment and advanced driver assistance (ADAS) features will continue to drive growth of semiconductor content on a per automobile basis and the automotive segment is expected to grow at four times the pace of the overall market with a CAGR of 8% through 2020.”

Memory is largely holding semiconductor demand back, largely due to oversupply and ongoing consumer PC demand weakness. Without memory included in the forecast, IDC says that the semiconductor market would grow 1.7% this year.

The consumer semiconductor market was down 11% last year, to $46.1 billion; this was due to weak system demand and pricing pressure in the core tablet and digital TV markets. Semiconductor revenues were up for the smart home, wearables, set-top boxes and gaming consoles, however. Through 2020, IDC forecasts a CAGR of 6%, as consumer IoT applications outpace market growth and TVs benefit from the UltraHD upgrade cycle.