Worldwide semiconductor revenue is forecast to total $364.1 billion in 2017, an increase of 7.2 percent from 2016, according to Gartner, Inc. This represents a complete turnaround for the semiconductor industry as the market experienced 1.5 percent growth in 2016.
"The worst is now over with a positive outlook emerging for 2017 driven by inventory replenishment and increasing average selling prices (ASPs) in select markets, particularly commodity memory and application-specific standard products," said Ganesh Ramamoorthy, research vice president at Gartner. "The turnaround that started at the end of the second quarter of 2016 will continue to gain momentum and we expect the improved conditions to carry through 2017."
Gartner has increased the outlook for 2017 by $14.1 billion in its most current forecast, of which the memory market accounts for nearly $10 billion. "Memory market supply and demand have turned positive for memory vendors who are pushing ASPs higher to recover margins. ASP increases for application-specific standard products (ASSP), discrete and analog chips and higher semiconductor content in key applications including the Internet of Things (IoT) were the other key drivers for revenue increases," added Mr. Ramamoorthy.
Overall, the mixed growth seen in 2016 will turn into a broad and more consistent growth in 2017. Areas to watch for in 2017 are the industrial, automotive and storage markets, which are growing quickly but represent a smaller portion of the overall market. Additionally, the slow-growth outlook for traditional applications such as smartphones and PCs highlights the importance of semiconductor markets outside of these categories, notably the IoT.
"This implies that semiconductor product managers who have depended upon these categories must now continue to look for adjacent opportunities in new emerging applications in the IoT and in areas like industrial, storage and automotive markets," said Mr. Ramamoorthy.
Additional analysis on the outlook for the semiconductor market can be found in the Gartner report "Semiconductor Forecast Database, Worldwide, 4Q16 Update."