Global Semiconductor Revenue to Fall by 9.6 Percent in 2019 Amidst US-China Trade Dispute

The ongoing trade dispute between the US and China has affected semiconductor supply and demand and as a result, the worldwide semiconductor revenue is forecast to total $429 billion in 2019 -- a decline of 9.6 percent from $475 billion in 2018, Gartner said on Monday.

A demand-driven oversupply in the DRAM market will push pricing down 42.1 percent in 2019 and the oversupply is expected to extend through the second quarter of 2020. The decline is owing to signs of a slower demand recovery at the hyperscale vendors and the increasing inventory levels of DRAM vendors. This ends the longest period of undersupply seen in the DRAM industry, said the report.

"A weaker pricing environment for memory and some other chips types combined with the US-China trade dispute and lower growth in major applications, including smartphones, servers and PCs, is driving the global semiconductor market to its lowest growth since 2009," said Ben Lee, senior principal research analyst at Gartner. The global NAND market has been in oversupply since the first quarter of 2018 and is now more pronounced as the near-term demand for NAND is weaker than expected. "We expect that high smartphone inventory and sluggish solid-state array demand will last for a few more quarters," added Lee. Given the aggressive price declines for NAND, it is possible to see a more balanced supply/demand outlook in 2020, said the report.