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Semiconductor revenue growth slowing

Mar. 20, 2008

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According to final data released from iSuppli Corp., the worldwide semiconductor market witnessed revenue growth of slightly above 3.28 percent last year.

Previously, iSuppli had forecasted a 4.7 percent DRAM decline and a 3 percent increase for NAND, and total chip market revenue growth of over 4 percent on a global basis.

The semiconductor market research company blamed the global memory market, reporting that DRAM revenue decreased by over 19 percent and NAND flash revenue declined by almost 4 percent quarter-over-quarter for Q4-2007.

Total memory chip revenue in the fourth quarter declined by 11 percent sequentially, down from iSuppli’s prediction of 1.2 percent growth in overall memory chip revenue. The research company suggested that the quarter’s poor memory performance was not only below its expectations, but below industry expectations, as it based its estimate in part on Q4 revenue guidances presented by semiconductor suppliers to the investment community in October and November 2007.

On March 5, ISuppli warned that it will lower its total 2008 growth forecast from 7.5 percent on market weakness, but has yet to do so. “This was a complete role reversal for memory semiconductors compared to 2006,” said Dale Ford, senior VP of market intelligence for iSuppli, in a statement. “During the second half of 2006, memory IC revenues helped to prop up the growth of the overall semiconductor industry. In 2007, the poor results for memory chips restrained overall market growth."

Ford added "if memory were excluded from the revenue total, the semiconductor market would have grown by 2.4 percent in the fourth quarter. However, due to the influence of the weak memory market, total semiconductor market revenues fell by about 0.5 percent in the fourth quarter.”

However, Hynix Semiconductor, Toshiba, and Elpida Memory managed to achieve memory-chip revenue growth of 15, 14.5, and 8.8 percent, respectively for all of last year. The weak market conditions had a major impact on most memory suppliers in 2007, iSuppli reported, noting that Nanya Technology and Qimonda saw their memory IC revenues fall by 32.4 percent and 26 percent, respectively, for 2007.

The world’s leading supplier of memory chips, Samsung Electronics, experienced a decline of 3.3 percent in its memory semiconductor revenue in 2007, which contributed to a 0.8 percent decline in total chip revenue for the year.

Looking outside the global memory market, iSuppli’s tone on the year was much cheerier, with the research company reporting that “several companies and product categories posted impressive performances.” For example, Infineon Technologies jumped to the world’s No. 9 ranking among global semiconductor suppliers, up from 15th in 2006.

Last year, Infineon acquired Texas Instruments’ DSL customer premise equipment (CPE) chip business and its wireless baseband semiconductor unit, boosting its revenue.

Infineon, which had fallen out of iSuppli’s top-10 ranking in 2006 after it split out its memory unit to form Qimonda, returned to the top-10 with a revenue rise of 21 percent compared to 2006 due a combination of organic expansion and new revenues from its acquisitions.

iSuppli data showed that it was two US fabless semiconductor supplier -- Qualcomm and Nvidia -- that led the growth among the top-25 chip companies during 2007.

Qualcomm’s revenues grew by over 24 percent as it moved up three positions in the rankings to reach 13th place, marking the first time a position in the top-10 is within reach of a fabless semiconductor supplier, iSuppli said.

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Source: SMCD Global Review.