SAN FRANCISCO — Semiconductor sales grew by 22 percent to reach a record $419.7 billion — with memory chips leading the way — according to a preliminary estimate by market research firm Gartner.
Gartner (Stamford, Conn.) estimates that increased sales of memory chips due to shortages of NAND flash and DRAM accounted for about two-thirds of overall chip market growth in 2017. Memory also become the single largest semiconductor products category last year, according to the firm.
The estimated total sales for the year of $419.7 billion — while preliminary — is more aggressive than the latest forecast issued by the World Semiconductor Trade Statistics (WSTS) organization last month. The WSTS — an organization of more than 50 semiconductor companies that pool sales data — expects 2017 semiconductor sales to be about $409 billion, an increase of 21 percent compared with 2017.
As expected, South Korea's Samsung Electronics — the top memory chip vendor — rose to No. 1 in overall semiconductor sales for the first time, displacing Intel, which had held the top spot in sales every year since 1992. Samsung's 2017 chip revenue of $62.2 billion accounted for 14.6 percent of the industry's total, while Intel's $57.7 billion in sales was good for about 13.8 percent of the market, according to Gartner.
Andrew Norwood, a research vice president at Gartner, said he expects memory pricing to weaken in 2018 and 2019, which would cause Samsung to lose the gains in revenue it has made and could boost Intel back to the top spot. "Samsung’s lead is literally built on sand, in the form of memory silicon," Norwood said in a press statement.
In fact, Samsung could slip all the way to the No. 3 in chip sales when the next memory downturn hits in about 2019, if plans for Qualcomm to acquire NXP Semiconductors and Broadcom to acquire Qualcomm come to fruition, according to Norwood. The combined sales of Broadcom, Qualcomm and NXP amounted to $41.2 billion in 2017, a total surpassed by Samsung and Intel, he said.
Other analysts, however, including Bill McClean of IC Insights, believe that Samsung's dominance in memory and strength in other semiconductor product categories will make it difficult for Intel to beat, even when the memory cycle turns.
Shortages of NAND and DRAM have persisted throughout the year and buoyed the semiconductor industry to multiple record-setting sales months and quarters. According to Gartner, NAND prices increased year-over-year for the first time ever in 2017, rising by 17 percent, while DRAM prices increased by 44 percent.
Last year marks the first time that semiconductor sales have eclipsed the $400 billion mark, just four years after breaking the $300 billion barrier in 2013.
— Dylan McGrath is the editor-in-chief of EE Times.