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Samsung’s memory market lead could be short-lived

Samsung’s memory market lead could be short-lived

How long can Samsung hold onto its new lead in the global memory chip game?

Last year saw Samsung topple Intel’s 25-year lead in the global semiconductor market, but the South Korean company’s new top spot in the memory space could be threatened when the market eases off, according to Gartner.

The industry analyst firm’s latest figures show that worldwide semiconductor revenue totaled US$420.4 billion in 2017, representing a 21.6 per cent increase from the 2016 revenue of US$345.9 billion.

"2017 saw two semiconductor industry milestones – revenue surpassed US$400 billion, and Intel, the [number one] vendor for the last 25 years, was pushed into second place by Samsung Electronics," Gartner research director George Brocklehurst said.

"Both milestones happened due to rapid growth in the memory market as undersupply drove pricing for DRAM and NAND flash higher,” he said.

Indeed, higher component prices have been blamed for the prices of PCs, smartphones and tablets going up over the past year or so, largely due to shortages in DRAM, flash, batteries and displays.

Within the broader semiconductor market, the memory segment surged by nearly US$50 billion, to reach US$130 billion last year, a 61.8 per cent increase from 2016.

Samsung's memory revenue alone increased nearly $20 billion in 2017, putting the company into the top spot in 2017 within that segment.

Revenues from Samsung’s chip unit have played a major hand in shoring up the tech giant’s recent financials, along with the early launch of its flagship Galaxy S9 smartphone.

However, Gartner said it predicts that the company's lead will disappear when the memory segment goes into its bust cycle, which is most likely to happen in late 2019, according to the analyst firm’s forecasts.

Gartner flagged a predicted 2019 crash in the semiconductor market as early as April last year, with prices expected to plummet.

Meanwhile, the non-memory semiconductor segment grew by $24.8 billion in 2017 to reach US$290 billion, representing a growth rate of 9.3 percent

At the same time, the big players appear to be getting bigger, with the combined revenue of the top 10 semiconductor vendors increasing by 30.6 per cent during 2017, accounting for 58 percent of the total market. The rest of the market, by comparison, saw an 11 per cent increase in revenue.


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