Expected Growth Fails to Materialize as Semiconductor Industry Revenue Falls to $297.6 Billion in 2012
Worldwide semiconductor revenue has totaled $298 billion in 2012, a 3 percent decline from 2011 revenue of $307 billion, according to preliminary results by Gartner, Inc. The top 25 semiconductor vendors' revenue declined 4.2 percent, more than the industry average, and accounted for a smaller portion of the industry's total revenue — 68.2 percent in 2012, compared with 69.2 percent in 2011.
The industry was expected to show little growth in the early part of 2012, although order rates were expected to creep up in the second half, paving the way for a recovery phase in 2013. However, the expected renewal did not occur in 2012. Third quarter order rates were below seasonal expectations, and guidance for the fourth quarter of 2012 forecast further declines.
"Uncertainty about the state of the macroeconomy, coupled with ongoing inventory overhang, sent ripples through the semiconductor industry," said Steve Ohr, research director at Gartner. "The hardest hit areas include the PC supply chain, memory, analog and discrete components. The PC business, ordinarily a growth driver, was on a negative slope for the first time in many years. PC production declined 2.5 percent in 2012. Even the smartphone juggernaut had begun to show signs of maturing, though it remained the strongest driver for revenue growth in 2012."
Intel recorded a 2.7 percent revenue decline (see Table 1), mostly due to declining PC sales. However, the company did hold onto the No. 1 market share position for the 21st consecutive year, capturing 16.6 percent of the 2012 semiconductor market, its best performance ever.
Table 1. Top 10 Semiconductor Vendors by Revenue, Worldwide, 2012 (Millions of Dollars)
2012 Estimated Revenue
2011-2012 Growth (%)
2012 Market Share (%)
Source: Gartner (December 2012)
At No. 2, Samsung Electronics saw its semiconductor revenue fall due to declines in its three major product areas, DRAM, NAND flash and system integrated circuit (IC). Bucking the industry trend and rising three places to No. 3, Qualcomm attributed its 29.6 percent growth to continued adoption of smartphones and the growth of 3G and LTE technology in emerging regions, such as China and India.
The only other top 10 semiconductor vendor to record positive growth in 2012 was Broadcom, which rose from the 10th to the ninth position with growth of 8.8 percent. While part of the company's year-over-year performance gain was attributed to the acquisition of NetLogic Microsystems, the highest organic growth in the company was once again achieved by the Mobile and Wireless division, which grew close to double digits. Broadcom's third division, Broadband, bounced back from a revenue decline in 2011 by growing in the mid single digits in 2012.
As a group, memory makers suffered the most. DRAM makers suffered from rapid price declines, while the NAND flash market also saw strong price declines as a consequence of sluggish bit growth. Overall, Samsung's semiconductor revenue was down 8.7 percent, and SK Hynix's was down 11.2 percent.
Additional information is provided in the Gartner report "Market Share Analysis: Preliminary Total Semiconductor Revenue, Worldwide, 2012." The report provides the worldwide market share rankings for the top 25 semiconductor vendors in 2012. The report is available on Gartner's website at http://www.gartner.com/resId=2275917.
Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior information technology (IT) leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to supply chain professionals, digital marketing professionals and technology investors, Gartner is the valuable partner to clients in more than 10,000 distinct enterprises. Gartner works with clients to research, analyze and interpret the business of IT within the context of their individual roles. Gartner is headquartered in Stamford, Connecticut, U.S.A., and has almost 9,000 associates, including 1,900 research analysts and consultants, operating in more than 90 countries. For more information, visit www.gartner.com.
Comments or opinions expressed on this blog are those of the individual contributors only, and do not necessarily represent the views of Gartner, Inc. or its management. Readers may copy and redistribute blog postings on other blogs, or otherwise for private, non-commercial or journalistic purposes. This content may not be used for any other purposes in any other formats or media. The content on this blog is provided on an "as-is" basis. Gartner shall not be liable for any damages whatsoever arising out of the content or use of this blog.