Semiconductor market slumps in 2015

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According to new figures from IHS global semiconductor revenues fell by 2 percent in 2015. Sequential quarterly growth was weak throughout every quarter of 2015, especially in the first quarter when the market declined 8.9 percent over the previous quarter – that represents the deepest sequential quarterly decline since the semiconductor market collapsed in the fourth quarter of 2008 and first quarter of 2009.

Global revenue in 2015 totalled $347.3 billion, down from $354.3 billion in 2014, according to IHS and this market drop follows solid growth of 8.3 percent in 2014 and 6.4 percent in 2013.

“Weak results last year signal the beginning of what is expected to be a three-year period of declining to stagnant growth for semiconductor revenues,” said Dale Ford, chief analyst at IHS Technology. "Anaemic end-market demand in the major segments of wireless communications, data processing and consumer electronics are expect to hobble semiconductor growth during this time.”

Overall semiconductor revenue growth is expected to record a compound annual growth rate (CAGR) of just 2.1 percent between 2015 and 2020, according to the latest information from the IHS Semiconductors Service. Current technology, economic, market and product trends suggest that new products will come to market that will enable a significant level of growth in semiconductor revenues from 2020-22 onwards.

According to Ford the big story for the semiconductor industry last year was, “the record level of merger-and-acquisition activity.”

Intel retained its number one ranking in 2015, after completing its acquisition of Altera, which allowed the company to offset declining processor revenues and achieve 2.9 percent overall growth in 2015. Qualcomm fell to fourth in the rankings as its revenues fell by 14.5 percent, its 2015 acquisition of CSR was not enough to counter declining revenues in the wireless markets. The final major deal among the top 10 in 2015 was NXP’s acquisition of Freescale, which boosted it from number 15 in the 2014 rankings to number seven in 2015.

Among the top 20, Infineon’s acquisition of International Rectifier enabled it to jump to number 12 in 2015.

Deals that are expected to close in the first half of 2016 will continue to reshape the leader board with Avago Technologies' acquisition of Broadcom, which is already ranked at number nine in 2015. The combined revenues of the two companies would place them at number five overall. ON Semiconductor’s acquisition of Fairchild Semiconductor is also expected to boost its place in the rankings.

Among the top 25 semiconductor suppliers, 14 companies achieved growth in 2015. This stands in sharp contrast to the overall semiconductor market where less than 42 percent of 285 companies tracked by IHS were able to achieve positive revenue results in 2015.

Semiconductor revenues for data processing, wired communications and consumer electronics all declined last year, with automotive electronics and industrial electronics growing less than 1 percent, while wireless communications - the strongest growth area - only grew 3 percent.

Semiconductor revenues in all regions of the world declined, and all seven of the major semiconductor segments (i.e., memory integrated circuits (ICs), micro-components, logic ICs, analogue ICs, discrete components, optical components and sensors) experienced a fall in revenue from 2014 to 2015. In fact, out of 128 semiconductor segments and sub-segments tracked by IHS, 89 declined. Combined, they accounted for over 77 percent of semiconductor revenues in 2015.

Only ten semiconductor market sub-segments worth more than $1 billion in annual revenue grew more than 5 percent year over year in 2015. Wireless communications logic application-specific integrated circuits (ASICs) and analogue ASICs both grew 30 percent, while radio-frequency (RF) small signal transistors, wired communications logic ASICs and wireless communications application-specific standard products (ASSPs) grew between 10 percent and 20 percent.