Memory and Storage

Semiconductor market grows 10.4% in 2020

30 March 2021

Despite the outbreak of the COVID-19 pandemic, revenues for semiconductors grew 10.4% in 2020 resulting in $473.3 billion, according to a new report from Omdia.

The market was driven by consumer behavior over the past year that pushed the world further into a technology-driven focus as increased demand for devices and infrastructure to support new work- and education-at home environments grew rapidly because of the pandemic, Omdia said.

The final quarter of 2020 was the best quarter ever recorded for chip revenue, reaching $130.6 billion and the second half of 2020 was much stronger than the first, which saw a deep uncertainty due to the pandemic. However, the first half of 2020 was not all bad for the semiconductor market as cloud infrastructure was built to sustain the technology push and DRAM and NAND were the major beneficiaries of the trend.

During the year, the top semiconductor companies remained firm with the top seven chip firms occupying the same spots since 2016, although the order has alternated. The top 10 of 2019 was also the top 10 of 2020 except for ST Microelectronics, which slipped from 8th to 12th in 2020 despite a revenue increase of 6.9% for the year, Omdia said.

Growth in the top 10 was seen by Qualcomm and MediaTek due to strong demand for chipsets, specifically for 5G as it continues to ramp up in volume. Both firms saw 45% growth in the second quarter of 2020, but Qualcomm rose only from 6th to 5th in the 2020 semiconductor market share rankings. Intel, Samsung, SK Hynix and Micron Technology remained the top four global semiconductor firms.

Memory rising

The memory market, specifically DRAM and NAND, returned to growth in 2020 with DRAM rising 6.7% in 2020 and NAND rising 24.3% to $57.2 billion, one of the strongest semiconductor performers during the year.

"2020 had been projected to be a rebound year following a disastrous 2019. Then COVID-19 hit," said Craig Stice, chief analyst at Omdia. "In 1H2020, as COVID-19 began to spread across the world and stay-at-home mandates were put into place, demand for NAND surged. Memory demand from datacenters erupted due to 'at-home' environments. PC markets flourished as corporate, consumers, and educational markets were upgrading PCs for at-home use, and at-home entertainment spiked (TV, gaming). All this drove increased ASPs in 1H2020 and contributed to the strong annual revenue gains."

MPU outperforms market

The market for microprocessors increased 12.4% in 2020 driven by laptop and desktop demand as students and workers were forced to stay at home during the pandemic. MPU represented 14% of the entire semiconductor market, making it one of the main markets of the semiconductor industry to reap the benefits of the pandemic.

"Companies and education providers have had to purchase laptops to enable work/learn from home and the extended lockdowns in many countries have driven both current video game consumers to upgrade their desktop PCs as well as driven new consumers to buy gaming PCs and laptops," said Paul Pickering, senior analyst at Omdia. "This sudden demand has also driven up ASPs, and thus pushed revenues up further. With the rollout of vaccines worldwide, this spike in demand will likely ease moving into H2 2021."

Automotive market falters

The market for automotive semiconductors struggled in 2020 seeing an annual decline of 4.4%, as auto sales stalled early on in 2020. This was hindered even further by a chip shortage that is gripping the industry currently and might last the entire year.

"The automotive market was hugely impacted by the coronavirus pandemic in the first half of 2020," said Sang Oh, senior analyst at Omdia. "Unused semiconductor inventory from 1H20 was used into 2H20 for automakers. But consumer demand returned beyond what the revised downward forecasts anticipated. As automakers have been running through their vehicle inventory in 2H 2020, they are changing their vehicle sales forecast and need to pump out more vehicles to meet demand. The automotive semiconductor market will bounce back in 2021 from the decline of 2020."

The full research can be found in Omdia’s Semiconductor Competitive Landscape (CLT) Spotlight Service.

To contact the author of this article, email PBrown@globalspec.com


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