Smartphones, ultramobiles, and IoT drive semiconductor sales through 2015, says Gartner

By Colin Barker | January 14, 2015 -- 13:21 GMT (05:21 PST)

Semiconductor revenue will reach $358 billion in 2015, a 5.4 percent increase from 2014, according to analyst Gartner.

The market continues to be driven by strong growth in smartphones, along with DRAM and NAND flash in ultramobiles and solid-state drives (SSDs), the analyst said.

Meanwhile "compute applications" will continue to be the largest market for semiconductors, Gartner said, followed by wireless and consumer applications.

Taken together smartphones, SSDs, and ultramobiles represent "more than two-thirds of total semiconductor revenue and have the most influence on the overall strength of the semiconductor market," said Gartner.

The analyst also believes the Internet of Things (IoT) will increasingly become one of the core drivers of the semiconductor market.

"The industrial electronics segment is expected to outperform overall semiconductor market growth and other electronic application categories with revenue growth of 9.1 percent," Gartner said. While growth will be driven by LED lighting applications for industrial and residential purposes, the IoT will also continue to drive very strong unit growth in 2015 and beyond.

Following industrial applications, wireless applications - driven mainly by mobile phones - will be the next biggest growth market for semiconductors in 2015, said Gartner. The 2015 revenue growth forecast for wireless applications, and specifically mobile phones, remains the same as the previous quarter's forecast.

Semiconductor revenue growth in 2015 is expected to slow from the 7.9 percent growth experienced in 2014. Garner research director Jon Erensen said this will occur "as DRAM returns to more traditional price reductions and the industry burns off excess holiday inventory".

"DRAM pricing was unusually firm in 2014 due to short supply, which propelled DRAM to be the fastest-growing device type in 2014 with 31.7 percent revenue growth," said Erensen. "DRAM supply and demand will be in line in 2015, driving bit pricing down to a more traditional 16.8 percent and reducing annual DRAM revenue growth to 7.7 percent."

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