Research firm Gartner has had to revise its projections for worldwide semiconductor, with it now expected to decline by 9.6 percent in 2019 compared to last quarter’s prediction which was set to slip by 3.4 percent.
“The semiconductor market is being impacted by a number of factors. 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.
“Semiconductor product managers should review production and investment plans to protect themselves from this weaker market,” he adds.
Much like Gartner’s several other revised projections for this latest quarter, it looks like things are either flattening out or declining, with those potentially affected having to re-strategise.
With regard to the ongoing dispute between the United States and China, Gartner says the US’ citing of security concerns from Chinese vendors will have long-term implications for the semiconductor industry. This increased uncertainty will force many in the industry to make alternative plans.
“These combined issues will accelerate China’s domestic semiconductor production, as well as create local forks of technologies such as ARM processors. Some manufacturing will relocate outside China during the dispute and many companies will seek to diversify their manufacturing base to reduce any further disruption,” Lee believes.
The senior principal research analyst adds that the slowing smartphone and PC markets are also creating cause for concern.
“We expect that high smartphone inventory and sluggish solid-state array demand will last for a few more quarters,” he highlights.
“However, looking further out is concerning given slowing demand drivers, such as PCs and smartphones, and more capacity as new fabs in China impact the market,” concludes Lee.
It therefore looks like the semiconductor market could dip below the two digit decline for the year if things continue the way they currently are. As such, when Gartner reveals their revision once again next quarter, it should be interesting to see if there is an increase in the slide.
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