Gartner, Inc. put out on April 14 an outlook that the global semiconductor sales revenue this year would rise 12.3 percent from 2016. This is a much higher outlook it released in January at 7.2 percent. Gartner is a large-scale market research firm with 1,900 analysts and consultants across the world. The world's semiconductor demand is rising at a surprisingly high rate to the degree that such a large market research organization made big forecast errors in three months' time.
On the day, Gartner explained, "We raised our 2017 outlook figures as the forecast output of smartphones, graphic cards, and automotive electronics has increased." It predicted that this year's semiconductor market size would reach US$386 billion. Last year, the worldwide semiconductor market grew only 1.5 percent from the previous year to $339.7 billion.
The market is led by memory chips for which Korean suppliers like Samsung Electronics and SK Hynix are leading. The average price of DRAMs for personal computers has almost doubled since mid-2016 due to an explosive demand growth. For example, a 4-gigabyte module that used be $12.50 a piece has shot up to $25. As smartphone makers try to secure supply of DRAMs and NAND flash memory chips, the price for these chips will likely continue an upward climb at least by the year's end.
Jon Erensen, analyst with Gartner, said, "We raised the outlook for the overall semiconductor industry due to the hike in DRAM and NAND flash prices. Smartphone and personal computer manufacturers will likely see their profitability worsen due to the shortage of semiconductors." He added, "If Chinese chip makers enter the market earlier than scheduled, the chip supply will overtake the demand and the price will likely soften beginning in 2019."