Technology research firm Gartner released an updated forecast for worldwide semiconductor revenue, expecting that industry sales will total $386 billion this year, up 12.3% from 2016. Gartner's forecast from late January called for 7.2% growth in revenue in 2017.
The outlook for 2017 (and by extension 2018) has been boosted by favorable market conditions during the second half of 2016. Commodity (DRAM) memory was highlighted as a strong spot.
PC DRAM pricing has doubled since the middle of 2016. NAND prices have grown sequentially and they are expected to peak in the second quarter of 2017, alongside DRAM prices. Though a price peak is expected in the second quarter, the impact may not be visible until vendors receive components that were delayed due to strong demand.
Although solid trends are expected to remain in place, Gartner expects that additional capacity in DRAM/NAND flash markets and growth in China will lead to a correction in 2019.
System vendors of smartphones, PCs, and servers may see pressure on their margins due to steady price increases for DRAM and NAND memory. Furthermore, component shortages, rising bill of materials, and the growing likelihood for a need to increase average selling prices will likely contribute to a bumpy market.
Gartner added that unit production estimates for premium smartphones, video cards, video game consoles, and automotive applications contributed to the upbeat outlook for 2017. The research firm acknowledged the rise of opportunities for semiconductors in the Internet of Things (IoT) arena, but that landscape remains small and uneven for the time being.