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$55bn gone from chip revenues last year, and that was before Covid-19 hit

By Bill Ray | April 21, 2020 | 0 Comments

In 2019 revenue from semiconductors was down by 12%, compared to the previous year, proving that it’s not just Covid 19 causing the industry some serious grief.

Most of the semiconductor industry had a pretty-poor time last year, with revenue down across the board. Intel regained the top spot, but only because Samsung depends more on the highly-volatile business of memory chips. Revenue from memory was down by almost a third in 2019, thanks to excess inventory and oversupply, and that dragged down the rest of the industry. If we take memory out of the equation then semiconductor revenue was still down, but only by 1.2%, which could be worse (as we shall see in 2020).

Intel got knocked on compute (laptops, servers, and suchlike) but made up that loss in storage, wired and wireless. The rest of the five biggest (Samsung, SK hynix, Micron & Broadcom) were down across the board, though wireless comms (mainly smartphones) saw the biggest declines.

A lot of this is down to uncertainty emerging from the US/China trade situation. America added various companies to its “Entity List”, including Huawei, but it was the uncertainty that caused the most disruption. Some companies (notably Huawei) were stockpiling chips in 2018, against future disruption, and so were able to burn through that inventory when things looked like they were going to settle down a bit.

For a long-term solution Huawei turned to domestic suppliers, particularly its own chip arm: HiSilicon. HiSilicon saw revenue up by 28.2%, as Chinese consumers bought local (pushing Huawei past Apple as the world’s second largest smartphone maker) and Huawei increasingly used its own chip designs where it could. That’s a trend which will continue, though Chinese growth will be limited over the next few years (along with the rest of the world).

The other winner in 2019 was Sony, which gained from the proliferation of cameras on the back of modern smartphones. Triple-cameras means three times the CMOS image sensors, most of which come from Sony.

So, when we’re all sitting at home lamenting the situation in 2020, we need to remember that all was far from rosy in 2019. The semiconductor industry will bounce back, but it won’t just be the virus that it has to bounce back from.

All the gory details can be found in our Market Share: Semiconductors by End Market, Worldwide, 2019 and the accompanying Market Share Analysis: Semiconductors, Worldwide, 2019.

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