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Where Would the Semiconductor Industry Be Without Memory?

The global semiconductor industry closed with revenues of $429.1 billion last year, up 21.7 percent from $352.4 billion. But excluding the memory market, where higher prices and supply shortages sparked revenues, the remainder of the market increased 9.9 percent, according to IHS Markit.

The market for computer processors increased 33.4 percent by the end of the year. Intel continues to lead that category, reporting almost twice as much revenue as second-placed Samsung, which vaulted over Intel as the world’s largest chip supplier last year. Broadcom’s business bloomed 16 percent last year, allowing it to pass Qualcomm as the world’s fifth largest supplier.

The steepest growth came in memory chips, with DRAM growing 76.7 percent and NAND growing 46.6 percent. “The technology transition from planar 2D NAND to 3D NAND drove the market into an unbalanced supply-demand environment in 2017, driving prices higher throughout the year,” said Craig Stice, IHS Markit’s senior director of memory and storage.

As the imbalance balances out, prices are expected to decline aggressively over the next year. Stice added in a statement that “the 3D NAND transition is now almost three-quarters of the total bit percent of production, and it is projected to provide supply relief” in data center, personal computer, and smartphone markets.

Nvidia, the world’s second largest fabless firm, finished as the tenth largest supplier for the first time last year. Nvidia’s annual revenues were $8.58 billion, up 42.3 percent from $6.03 billion, putting its growth closer to memory chip manufacturers like Micron and SK Hynix, which reported 81.1 percent and 79.7 percent growth last year, respectively.

In addition to supplying server chips that handle training for machine learning algorithms, Nvidia provides graphics accelerators that make driving decisions for autonomous cars. The company’s graphics chips run these programs by splitting software into smaller parts and processing them simultaneously in parallel.

Nvidia’s graphics cards have also been hoarded by speculators mining digital currencies such as Ethereum and Bitcoin, tightening the supply and causing prices to skyrocket. The company is facing backlash from customers that use them to build personal computers for gaming, while the shortage has pushed other companies to design custom chips for mining.

The numbers also reflect the growing concentration and consolidation of power in semiconductors. The 10 largest suppliers accounted for $251 billion in revenue last year, giving them around 58 percent market share, according to IHS Markit, up from 46 percent a decade ago, according to market research firm IC Insights.

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