SAN FRANCISCO—The largest chip vendors buoyed the semiconductor industry's growth rate even more than usual in 2016 as an unprecedented wave of consolidation continued to roil the rankings of the top 25 firms, according to an analysis of sales data by market research firm Gartner Inc.
Gartner (Stamford, Conn.) concluded that global semiconductor sales reached $343.5 billion last year, an increase of 2.6 percent compared to 2015. The growth rate is higher than that estimated by other market watchers previously, including the World Semiconductor Trade Statistics organization, which said in February that industry sales grew by 1.1 percent.
The top 25 vendors, however, grew sales by a combined 10.5 percent in 2016, according to Gartner, and accounted for nearly 75 percent of total market share. By contrast, the rest of the semiconductor vendors in the market saw their sales declined by 15.6 percent, Gartner said.
According to James Hines, a research director at Gartner, the relative growth of the top 25 vendors compared to the rest of the market is skewed by the high degree of merger and acquisition activity that took place in 2015 and 2016.
"If we adjust for this M&A activity by adding the revenue of each acquired company to the revenue of the acquirer for both 2015 and 2016 where necessary, then the top 25 vendors would have experienced a 1.9 percent revenue increase, and the rest of the market would have increased by 4.6 percent," Hines said, in a press statement.
Major acquisitions that had a significant impact on the vendor rankings for 2016 included Avago Technologies' acquisition of Broadcom Corp. to become Broadcom Ltd., On Semiconductor's acquisition of Fairchild Semiconductor, and Western Digital's acquisition of Sandisk, Gartner said. The largest mover in the top 25 was Broadcom, which moved up 12 places in the market share ranking, Gartner said.
Intel remained the No. 1 semiconductor vendor for 2016, a position it has held since the 1990s. However, according to Gartner, South Korea's Samsung Electronics Co. Ltd. cut into Intel's overall semiconductor industry market share in 2016. Intel held 15.7 percent of the market, while Samsung held 11.7 percent, according to Gartner.
Some researchers, including IC Insights, have speculated that particularly strong memory pricing in the current market could enable Samsung to pass Intel in chip sales as early as this quarter.
Top 10 semiconductor vendors by sales, 2016 (in millions of dollars).
That the semiconductor industry achieved growth at all in 2016 came as a major surprise as sales really accelerated in the second half of the year. Early last year, in the midst of a widespread semiconductor inventory correction, market watchers-—including Gartner—were predicting that the industry would contract.
But Hines said the weak sales environment in the first half of the year gave way to strengthening demand and improving pricing for chips. "Worldwide semiconductor revenue growth was supported by increasing production in many electronic equipment segments, improving NAND flash memory pricing and relatively benign currency movements," Hines said.
—Dylan McGrath is the editor-in-chief of EE Times.