Apple's iPhone and game consoles to prop up chip industry in 2014

The semiconductor industry will see more incoming revenue this year after the new iPhone is released, Gartner says

Apple fans may not be the only ones waiting for a new iPhone later this year -- semiconductor industry revenue will get a boost from it too, according to Gartner.

The iPhone release will spark semiconductor demand, Gartner said in a statement. Based on growing demand for the iPhone and other hardware, the research firm is projecting semiconductor revenue to be US$336 billion this year, growing 6.7 percent compared to 2013, outpacing the previous forecast of 5.4 percent made in the first quarter.

The iPhone uses chips, memory, storage, sensors and other semiconductors that Gartner is counting in the overall revenue forecast. Beyond the iPhone, smartphone shipments are also expected to continue rising, which will drive up overall semiconductor revenue growth.

Semiconductor revenue growth is widespread, said Ranjit Atwal, research director at Gartner, in a statement. Demand for Microsoft's Xbox and Sony's PlayStation 4 are also expected to ramp up later this year, which will help drive up processor revenue.

Semiconductor revenue is measured based on production and shipment of chips for device makers, who then make products. For years, PC semiconductors were the main driver of revenue, but tablet and smartphone shipments are expected to outpace PC shipments by next year. Manufacturers like Samsung, Toshiba, Micron and SK Hynix are dedicating more capacity to making semiconductors like low-power mobile processors, NAND flash storage and LP-DDR memory for mobile devices.

The explosion in hardware shipments will benefit DRAM revenue this year, with Gartner projecting it to reach $41 billion, growing 18.8 percent from 2013, which is significant considering the sector recovered only last year after three years of revenue decline. The DRAM market is volatile due to fluctuation in pricing and supply-demand cycles. Gartner expects the next DRAM downturn in 2016.

Revenue from non-memory semiconductors, including processors, sensors and specialized chips, will grow 5.2 percent, Gartner said.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

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Agam Shah

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