Editorial Feature

Why are Mid-Year Semiconductor Sales High Compared to 2017?

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The 2018 midyear semiconductor sales were record-breaking. They were found to be 6.0% higher than the previous quarter and a staggering 20.5% higher than the 2017 midyear review.

According to the World Semiconductor Trade Statistics (WSTS), an independent non-profit company which represents most of the semiconductor industry, found that, globally, semiconductor sales saw a 20.4% increase than the year-to-date sales between 2017 and 2018 and an increase of 1.5% between June and July, showing a sales increase from $39.3 billion per month to $38.7 billion. WSTS, which was founded in the mid-'80s, has forecast another increase for 2019 by using market data from the sources such as the Semiconductor Industry Association (SIA) to create three-month forecasts.

The SIA is headed by John Neuffer and represents the semiconductor manufacturing, design and research industry in the United States. They reported a second-quarter sales total of approximately $117.9 billion in 2018, a 6% increase from the previous quarter.

Halfway through 2018, the global semiconductor industry continues to post impressive sales totals, notching its highest-ever quarterly sales in Q2 and record monthly sales in June. Global sales have increased year-to-year by more than 20 percent for 15 consecutive months, and sales of every major product category increased year-to-year in June. Sales into the Americas market continue to be strong, with year-to-date totals more than 30 percent higher than at the same point last year.

John Neuffer, CEO and President, Semiconductor Industry Association

Semiconductors and semiconductor devices have been around for a long time and therefore it is natural to ask there has been such a dramatic increase in investment in the industry in recent years. There are many factors surrounding the growth of semiconductor sales and these are summarized below:

  • Demand: Semiconductors and semiconducting materials have become essential to innovative technology. They can be found in the vast majority of electrical devices, such as smartphones, laptops, and computers. Therefore, with the ever-increasing demand for the latest technology, it is easy to understand the growth in profits in the market.
  • Innovation: Semiconductors are at the forefront of both wireless and nanotechnology. These research fields are a growing sector of the market and semiconductors are needed in order to continue creating new products.
  • The growth of other sectors: There has been a secure and continuous increase in IOT hardware sales. This has had a large impact on semiconductor sales as the IOT industry relies upon semiconductors to create a reliable product. In addition to this, the memory chip market grew from $50bn to $130bn, which is nearly a 60% increase and therefore an increase to the semiconductor market was inevitable.
  • Consolidation: The semiconductor industry, especially in the US is very consolidated. Nine companies make up more than half (59%) of the semiconductor sales revenue and the US makes up approximately 48% of the global semiconductor market. This means that it is a fairly safe investment for shareholders.

All of these reasons mean that the semiconductor industry will most likely grow at a steady pace. Most of the world’s semiconductor sectors showed an increase from 2017 including China (30.7%), South America (26.7%) and Europe (15.9%). According to the WSTS, this trend is expected to continue into the first half of 2019.

Sources and Further Reading

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