Gartner: 2020 woes were no obstacle for semiconductor market growth

Despite all of the economic troubles of 2020, semiconductor revenue grew by 10.4% globally in 2020, with 5G and COVID-19 lockdown-related hardware purchases driving the positive trend.

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The worldwide semiconductor market, which manufactures the chips used to make things such as computer memory, GPUs and 5G chipsets, posted revenue of $466.2 billion in 2020, which Gartner said is an increase of 10.4% in the global market compared to 2019. The reasons for the growth in semiconductor revenue, despite an overall economically rocky 2020, was the direct result of the lifestyle and business changes caused by things like the COVID-19 pandemic. 

The industries that grew, were the exact industries one would expect to grow when much of the global workforce was sent home, said Gartner research Vice President Andrew Norwood. The parts that declined, Norwood said, declined for the exact same reasons.

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"Memory, GPUs and 5G chipsets led semiconductor growth … while automotive and industrial electronics suffered due to lower spending or a pause in spending owing to COVID-19," Norwood said.

Individual company revenue shook up a bit, with NVIDIA, MediaTek and KIOXIA all joining the top-10 semiconductor vendors. Among top players there was no change; Intel still ranks first, followed by Samsung and SK hynix.  

The research report that details Garnter's findings (only accessible to Gartner clients) spells out in greater detail the reason for the changes, which contrast with early 2020 assessments that COVID-19 would have a cross-market negative impact on revenues. The actual effect, Gartner said, was more nuanced.

Industries that grew, like wired communications, grew little "because enterprise spending remained paused for most of the year, although hyperscale and broadband compensated for the loss resulting in growth of wired communications," Gartner said. 

NVIDIA posted the highest 2020 growth among semiconductor manufacturers, with its revenue jumping 45.2% from 2019. Unsurprisingly, Garnter said, "NVIDIA's growth was primarily driven by growth in the company's gaming-related business and data center business." Its data center business growth may be further tied to the 500% growth that its own NVIDIA GeForce Now game streaming service experienced between February and November 2020.

5G smartphone chipsets were another massive growth area despite overall smartphone production declining by 12.7% over the course of the year, in part due to supply-side challenges at the start of the pandemic. "From a semiconductor perspective, the strong growth of 5G offset the weaker system unit growth with increased semiconductor dollar content, including memory, higher-ASP 5G chipsets and additional radio frequency (RF) front-end components and power management ICs," Gartner said.

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One-third of the overall semiconductor market growth in 2020 was driven by memory, like DRAM and NAND flash. "Memory benefited from the key trend in 2020—the shift to home working and learning—which fueled increased server build from hyperscale vendors to satisfy online working and entertainment, as well as a surge in PCs and ultramobiles," Gartner said.

The biggest losers, as mentioned above by Norwood, were automotive and industrial electronics. The automotive market, in particular, was the only one to post negative growth, with a 5.6% decline overall. Individually, the worst performing semiconductor category was non-optical sensors (-1.2%), which are largely used in the automotive industry.

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