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July 9, 2015

Device demand causes semiconductor revenue slide

Gartner said the typical second-quarter bounce did not materialise this year.

By CBR Staff Writer

Slower-than-expected sales of PCs, smartphones and tablets are affecting global semiconductor revenue, which could increase just 2.2% this year to $343bn.

Research firm Gartner has lowered its earlier chip sales forecast of 4% growth due to what it calls softness in key electronic equipment segments.

The impact of the strong dollar on demand in key markets was also a factor in the lower semiconductor forecast.

Even though demand for smartphones and solid state drives will drive semiconductor sales, the PC segment will see a 8.7% decline in production this year.

Gartner research director Jon Erensen said: "Inventory in the PC market remains high, despite vendors looking to clear the supply chain in anticipation of Windows 10 and Intel’s Skylake products.

"Any issues with the launches of Windows 10 or Skylake in the third quarter of 2015, which are expected to reinvigorate PC sales, could lead to further decline."

In the smartphone market, Apple’s iPhone will have strong unit growth and increasing average selling prices due to the better performance of the iPhone 6 and iPhone 6 Plus.

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The growth will however be affected by the flat performance in high-end Android smartphones and general softness in the Chinese smartphone market.

Despite the hype surrounding wearables, the devices will just represent 1% of demand with smartwatches leading the sector.

Gartner said from a device point of view, dynamic random-access memory (DRAM) continues to be one of the primary growth drivers of the entire industry.

DRAM revenue is expected to increase 3.8% this year, after a 32% rise in 2014. However, revenue is expected to decline 17.4 % and 7% in 2016 and 2017, respectively, due to an oversupply or underdemand and continued technology migrations.

Erensen said: "The typical second-quarter bounce did not materialize this year, and as a result, the semiconductor industry is more back-end loaded and dependent on a strong third-quarter rebound, driven by Windows 10 and the ramp-up to the holiday season."

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