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Gartner: Memory market coming under pressure

The semiconductor category grew last year but memory contributed a significant portion of that and there are already signs that position is not sustainable

Those operating on the memory side of the semiconductor market have been warned that things are going to get tougher this year.

Gartner has just delivered its 2018 wrap-up on the semiconductor market noting that worldwide revenues improved by 13.4% last year. With memory accounting for a third of that figure the technology plays an important role in determining the fortunes for the future.

The analyst house noted that towards the end of last year memory had already started a downturn and that was already being felt by the market leader Samsung.

“The largest semiconductor supplier, Samsung Electronics, increased its lead as the number 1 vendor due to the booming DRAM market,” said Andrew Norwood, vice president, analyst at Gartner. “While 2018 continued to build on the growth established in 2017, the overall gains driven by memory were at half the 2017 growth rate. This is attributed to memory entering a downturn late in 2018.”

There are concerns that the downturn will continue into this year and it could have a further impact on the market leaders, which include Intel, SK hynix, Micron, Broadcom and Qualcomm as well as Samsung.

Margins are going to come under further pressure and there are prospects of oversupply adding to the issues in the memory space.

“The current rankings may see significant change this year with the expectation that memory market conditions will weaken in 2019,” said Norwood. “Technology product managers must prepare for this limited growth to succeed in the semiconductor industry.”

“2019 will be a very different market from the previous two years...Memory has already entered a downturn, there is the looming trade war between the U.S. and China, and mounting uncertainty about the global economy," said Norwood.

Gartner is advising those vendors keen to hold onto their positions in the market share tables to invest emerging technologies and new manufacturing approaches.

The advice for the non-memory semiconductor players was to look beyond tablets and phones and to IoT as areas where the products will be used.

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