Electronics Production | December 17, 2010

Semiconductor revenue expands by record margin in 2010

The global semiconductor market will achieve the largest dollar increase in its history in 2010, courtesy of a boom in DRAM and NAND sales that is benefiting memory suppliers, according to a preliminary forecast from market researcher firm iSuppli.
Worldwide semiconductor revenue will amount to USD 304 billion in 2010, up from USD 229.5 billion in 2009. This represents growth of 32.5% for the year. Percentage growth was higher in 2001 than in 2010, when revenue rose by 36.7%. However, revenue increased by USD 74.5 billion in 2010, a record increase that shattered the previous benchmark expansion of USD 59.2 billion in 2001.

Boom times for chips

The semiconductor resurgence of 2010 is both broad and deep, as illustrated by results including:

- Every major category within the semiconductor market, with the exception of NOR flash and specialty memory, is projected to achieve double-digit revenue growth in 2010.

- Despite ongoing economic turbulence and uncertainty, the semiconductor industry achieved six sequential quarters of growth through the third quarter of 2010, marking the longest period of continuous growth since 2004.

- The key DRAM and NAND flash memory market segments achieved 80% and 40% growth, respectively, leading the industry boom.

- Out of 150 leading semiconductor suppliers tracked by iSuppli on a quarterly basis, an amazing 90% is expected to achieve revenue growth in 2010.

Happy memories of 2010

The tremendous expansion in DRAM and NAND sales is benefiting the leading memory suppliers, causing many of them to exceed the expansion of the overall semiconductor market in 2010.

Memory suppliers Hynix Semiconductor of South Korea and Elpida Memory of Japan are set to achieve revenue increases of 69.3% and 74.2%, respectively—the largest growth among Top 20 semiconductor companies based entirely on organic growth. This will cause Elpida’s ranking to jump five spots, rising from No. 15 in 2009 to No. 10 in 2010. Hynix advanced one place to No. 6.

Samsung Electronics of South Korea also is benefiting from the dramatic growth of the memory market. Company revenue is expected to surge by 60.8%, causing its market share expand to 9.3%, up 1.7 points from 7.6% in 2009.

The urge to merge

Growth among individual semiconductor suppliers in 2010 also was driven by mergers and acquisitions.

Merger and acquisition activity in 2010 resulted in triple-digit growth for Renesas Electronics and Micron Technology, allowing them to rise to No. 5 and No. 8 in the rankings, a jump of four and five positions, respectively. Renesas Electronics was formed by the merger of Renesas Technology and NEC Electronics, which were ranked No. 9 and No. 12 in 2009 before their merger. Micron Technology completed its acquisition of Numonyx in 2010.

Semiconductor surprises

A deeper examination of the dramatic growth in the semiconductor market in 2010 yields some surprising insights.

Despite the relatively modest growth of worldwide car sales in 2010, the automotive semiconductor market is projected to achieve the highest growth of all major chip application markets with growth of 41.1%. This will vastly exceed the growth of the second-fastest growing segment, the data processing semiconductor market, which expanded by 36.7% largely because of the red-hot DRAM segment.

On the other hand, regardless of all the headlines showing the growth of smart phone shipments, the wireless communications segment will see the lowest overall growth among the major chip application markets, with semiconductor revenue rising by only 24.4% in 2010.

Americas market rises again

In another surprising outcome, chip sales to the Americas market are expected to see the highest growth of all worldwide regions in 2010 with an expansion of 38.4%. After years of leading the world in growth, the Asia-Pacific region in 2010 is projected to drop to second place in 2010, with 37.6% growth.

On the other hand, companies headquartered in the Asia-Pacific region should capture in 2010 the No. 2 spot in overall combined market share. As a group, Asia-Pacific companies are expected to grow by 46.6% and move past the Japanese suppliers, who are projected to rise by 27.9% as a group, to become the second-largest regional faction of chip makers in the world following the Americas.

Semiconductor winners and losers

Marvell Technology Group of the United States in 2010 is expected to achieve organic revenue growth of more than 43% and jump 5 places to the No. 18 spot.

Qualcomm and Advanced Micro Devices (AMD) of the United States and Sony of Japan have experienced revenue growth notably less than the overall market and will slip three to four positions in the rankings in 2010.

After a number of years of dramatically outperforming the market, MediaTek of Taiwan fell back to earth in 2010, as it will barely achieve revenue growth at 1.2%, the only company among the Top 20 to not achieve a double-digit increase. The company is expected to slip to No. 19 in the rankings, down from No. 16 place in 2009.

With all of the market share moves among the Top 20 suppliers, only one company is at risk of dropping out of the list of 20. At this point, iSuppli projects nVidia of the United States will retain its ranking at No. 20. However, ROHM Semiconductor is competing for the final slot among the Top 20 and the final outcome should be very close.

Soft landing in 2011

While growth in electronics revenue is expected to continue in 2011, the multiplying factors that propelled growth in 2010 will lose their potency next year. As a result, iSuppli is projecting a soft landing for the semiconductor industry in 2011 with 5% annual growth.
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January 17 2019 2:20 pm V11.11.0-1