Semiconductor revenue fell 11.9 percent to $418.3 billion in 2019, according to preliminary results by Gartner.
Intel has regained the No. 1 position in the global semiconductor market as the downturn in the memory market negatively impacted many of the top vendors, including Samsung Electronics, the No. 1 vendor by revenue in 2018 and 2017.
The memory market revenue, which accounted for 26.7 percent of semiconductor sales in 2019, fell 31.5 percent in 2019.
Within memory, DRAM revenue decreased 37.5 percent due to an oversupply that started at the end of 2018 and lasted throughout 2019. The oversupply was caused by a sudden fall in demand from the hyperscale market.
Excessive inventory at DRAM vendors in the second half of 2019 pushed pricing lower and resulted in 47.4 percent drop in the average selling price (ASP) in 2019.
Intel’s semiconductor revenue fell 0.7 percent in 2019, driven by a slowdown in the server market, an ongoing constrained CPU supply and the 4Q19 sale of its cellular modem business to Apple.
Samsung dropped to the No. 2 position due to the downturn in the memory market. Like all memory vendors, Samsung struggled with oversupply and falling prices in both the DRAM and NAND flash markets. Samsung’s memory revenue, which accounted for 82 percent of its sales, declined 34 percent in 2019.
Within the memory segment, NAND flash experienced a milder 2019 downturn than the overall memory market, with a revenue decline of 23.1 percent due to elevated levels of inventory at the end of 2018.
NAND market began to stabilise in July 2019, aided by a power outage in the fabs jointly owned by KIOXIA and Western Digital. This power outage acted as a catalyst to clean out vendor inventories and prompted prices to increase from unsustainable lower levels.
Recovery in NAND will continue in 2020 due to low supply bit growth being overwhelmed by strong demand from solid-state drive (SSD) adoption and the ramp up of 5G smartphones.
“In 2020, we expect to see semiconductor market revenue increase after the high inventory clearance to drive up the chip ASP, especially in the memory sector,” Andrew Norwood, research vice president at Gartner, said.