5G demand to drive semiconductor recovery
Global revenue will rise to $448 billion next year, up from $422.8 billion in 2019, the market research firm states and gives the deployment of 5G as the demand driver that will require semiconductors for infrastructure and reinvigorate the smartphone market. In addition the arrival of 5G will drive new services and economic activity and boost other chip markets in consumer, industrial and automotive.
The current downturn is mainly the result of a fall in DRAM and NAND flash memory pricing that started in late 2018 due to an oversupply of components. While that situation will abate in the 2H19 the semiconductor market is still set to be flat or decline in the 1H20. The recovery will materialize in the second half of 2020, courtesy of 5G.
Global semiconductor market forecast (in millions of dollars). Source: IHS Markit.
“Throughout the history of the semiconductor industry, every market downturn has ended with the arrival of a technical innovation that spurred a major increase in demand,” said Len Jelinek, senior director of semiconductor manufacturing for IHS Markit Technology, in a statement. He referenced the advent of the worldwide web and the iPhone as such innovations.
Following declines in 2018 and 2019, the global smartphone business is expected to return to annual unit shipment growth in 2020. As a result, chip sales to this segment increasing by 7 percent in 2020, following a 22 percent drop in 2019.