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    Worldwide semiconductor revenue in 2023 totaled $533 billion, a decrease of 11.1% from 2022, according to a new report from Gartner, Inc. The combined semiconductor revenue of the top 25 semiconductor vendors declined 14.1% in 2023, accounting for 74.4% of the market, down from 77.2% in 2022. 

    “While the cyclicality in the semiconductor industry was present again in 2023, the market suffered a difficult year with memory revenue recording one of its worst declines in history,” said Alan Priestley, VP analyst at Gartner. “The underperforming market also negatively impacted several semiconductor vendors. Only nine of the top 25 semiconductor vendors posted revenue growth in 2023, with 10 experiencing double-digit declines.”

    Memory Products Take a Hit

    According to Gartner, revenue for memory products declined 37% in 2023—the biggest decline of all the segments in the semiconductor market. “Smartphones, PCs and servers, three of the largest segments for DRAM (dynamic random access memory) and NAND (non-volatile storage technology that doesn’t need power to retain data), faced weaker than expected demand and excess channel inventory, especially in the first half of 2023,” said Joe Unsworth, VP analyst at Gartner.

    In 2023, DRAM revenue declined 38.5% to total $48.4 billion and NAND flash revenue decreased from 37.5% to $36.2 billion. Gartner says nonmemory revenue fared better, declining by just 3% in 2023. The market witnessed weaker demand, it notes, and excess channel inventory negatively impacted the segment throughout the year.

    “Unlike the memory vendors, most non-memory vendors experienced a relatively benign pricing environment in 2023,” said Unsworth. “The demand for non-memory semiconductors for AI applications was the strongest growth driver, with the automotive sector (especially electric vehicles), defense and aerospace industries, also outperforming most other application segments.”

    A Somewhat Surprising Outcome

    Even before Gartner’s new report was released, global electronics component supplier WIN SOURCE noticed that the global semiconductor revenue for 2023 was going to fall short of expectations.  But considering that the global semiconductor market has consistently been a high-growth industry, the 11% contraction was surprising. 

    “This decline is believed to have caught many in the industry off guard, highlighting the instability and challenges within the semiconductor sector,” the distributor says. “Particularly noteworthy is the sharp drop in memory chip prices, a significant factor contributing to the market contraction.”

    Specific to memory products, WIN SOURCE says the double-digit decline can be attributed to weakened demand for consumer electronics and excess inventory across various industries, which was a major contributor to the overall softness in consumer spending in 2023.

    “However, the report also highlights that revenue performance remains relatively strong in applications such as artificial intelligence (AI), electric vehicles, national defense and aerospace,” the distributor points out. “Therefore, there’s no need for a pessimistic outlook on the market.”

    What’s Ahead?

    Gartner’s forecasts indicate that while semiconductor market revenues declined last year, the sector is expected to grow by 17% in 2024. “This demonstrates the resilience and recovery potential of the semiconductor industry,” says WIN SOURCE, which plans to work with its customers to address the challenges and leverage the new opportunities during the year ahead.

    The distributor is closely monitoring technological advancements, market demands, and competitive conditions to formulate adaptable strategies. “At the same time, we will increase investments in the innovation field to provide better solutions for our customers,” the company says, “ensuring WIN SOURCE maintains its competitiveness in the semiconductor industry.”

    ©2024 Win Source Electronics. All rights reserved. This content is protected by copyright and may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of Win Source Electronics.

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