SAN MATEO, CA – Worldwide semiconductor revenues will decline to $440 billion in 2019, down 7.2% from 2018, says International Data Corp. This follows three consecutive years of growth, with year-over-year growth of 13.2% in 2018.

The firm forecasts semiconductor revenues will recover in 2020 and log a CAGR of 2% from 2018-2023, reaching $524 billion in 2023.

After a multiyear growth cycle of strong demand and appreciating ASPs for DRAM and NAND, the end of last year brought oversupply, which will continue throughout the year and into 2020. Despite the challenging fourth quarter, the DRAM and NAND memory markets grew to $99 billion and $55 billion in 2018 respectively, reflecting year-over-year growth rates of 36% and 12% for 2018.

Excluding DRAM and NAND, the overall semiconductor market grew 8% year-over-year, according to IDC. For 2019, non-memory semiconductors are forecast to grow 1% to $319 billion. Both DRAM and NAND are expected to decline in 2019 and 2020.

The strong memory market resulted in Samsung Electronics retaining the top semiconductor manufacturer position and enabled memory manufacturers to be three of the top four semiconductor companies this past year. Revenue concentration also continues to increase for the overall market, with the top 10 companies making up 62% of the semiconductor market, compared to 60% in 2017 and 56% in 2016.

IDC expects market consolidation will begin to accelerate as the industry gets more clarity on the trade tariff dispute between China and the US. So far this year, six notable M&A deals have been announced, as well as one large divestiture by Intel. IDC expects more moves in 2020 and 2021 in the sensor, connectivity, automotive, and AI and computer vision markets, as suppliers look to drive more top-line growth and improve access to new markets.

"The current market downturn is being driven by a broad weakness in demand, specifically centered in China, and an ingestion of excess inventories in some of the major markets, including automotive, mobile phones, and cloud infrastructure," said Mario Morales, program vice president, Semiconductors at IDC. "We expect the market to bottom by end of the third quarter this year as we work through inventories and demand begins to gradually return. Cloud infrastructure investment, 5G mobile devices, WiFi 6 adoption, Smart NICs, automotive sensors, powertrain technologies, AI training accelerators, and edge inference SoCs will be instrumental in our growth expectations for 2020 and beyond."

In 2018, the automotive market and the industrial markets, excluding memory, grew at 4.8% and 7.8%, respectively.

"While electrification, infotainment, and advanced driving features are increasing semiconductor content per automobile, the decline in automobile unit sales in 2018 lowered overall growth in automotive semiconductors,” said Nina Turner, research manager for Semiconductors at IDC. “Economic deceleration and declining vehicle sales will continue to put pressure on the automotive semiconductor market throughout this year. However, our long-term thesis remains intact. The automotive market remains one of the strong growth drivers over the forecast horizon as semiconductor content and design activity for autonomous enabling technologies will continue to drive three to four times more growth than the overall market."

While the computing industry experienced strong growth in 2017 and 2018, semiconductor revenues for the computing industry segment are expected to decline 5.1% this year but will show a positive CAGR of 1.3% for the 2018-2023 forecast period. Two bright spots for the computing segment are x86 servers and SSDs, growing with an 11.3% and 9.8% CAGR respectively for 2018-2023.

Semiconductor revenue for the mobile wireless communications segment will grow 1.8% year-over-year this year, with a CAGR of 4.8% for 2018-2023. Semiconductor revenue for 4G mobile phones will experience a slowdown as 5G phones begin to ramp up in 2020, becoming mainstream by the middle of the next decade. RF subsystem in mobile devices will continue to drive the majority of the revenue growth, as the subsystem continues to support more complexity, additional antennas, and the increase in bands on every phone.

The consumer semiconductor segment will grow at a 6.4% CAGR for 2018-2023, as consumer IoT devices and home automation continue to gain traction and scale. Connected devices will continue to drive more sensors and processing at the edge.

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