Seeing a decline in Q1 of any financial year is kind of expected, especially in any market focused on consumer goods, due to the Christmas period. However, Q1 2019 saw one of the sharpest declines in semiconductor market history.
This is according to a report from the World Semiconductor Trade Statistics (WSTS) organisation. In this report, they state that the market declined by 15.5% in the first quarter of this year. To put that into perspective, the market fell from $114.7 billion to $96.8 billion. We also saw a decline in sales of 13% year-over-year.
A decline can also be observed when looking month-to-month, as semiconductor sales dropped 1.8% from February to March 2019.
There is also another report from the analyst group IC insights, who claim that the drop is worse than the one stated by the WSTS. They claim that the semiconductor market dropped by 17.6%.
In a recent statement, IC Insights said, “The first quarter is usually the weakest quarter of the year for the IC market, averaging a sequential decline of 2.1% over the past 36 years, but the severity of the 1Q19/4Q18 IC market drop has started this year off at a very low level. As a result, given the typical seasonality of the IC market, an abnormally strong second half of the year will be required in order to avoid a full-year 2019 double-digit IC market decline.”
This raises one very important question, just what is the cause of this decline? As with anything as large and complex as this, it comes down to numerous factors. The biggest is undoubtedly the ongoing trade war between US and China, which is causing issues all across various technology industries. We are also expecting to see RAM and NAND drop in sales, in both the smartphone and data centre market segments.
Various industries are also still reeling from the cryptocurrency market bust, which has caused the GPU market to stagnate, alongside the lukewarm reception to Nvidia’s RTX Turing graphics cards. We may see things improve as we move towards the release of AMD’s EPYC Rome 7nm data centre series, but at present, the semiconductor market is suffering an assault from multiple sides.