Next DRAM bust will slow down chip market in 2016, Gartner says

But the market will record fast revenue growth until then

Worldwide semiconductor revenue will grow at a fast pace this year but will slow down in 2016 when the DRAM market hits its next bust cycle, according to Gartner.

The research firm predicts semiconductor revenue will reach an all-time high of $US338 billion this year, up 7.2 per cent from last year. The projection is higher than Gartner's previous growth forecast of 6.7 per cent.

The growth this year will be driven by shipments of smartphones, tablets and other electronics, which use processors, memory, sensors and other semiconductors. The semiconductor market has stabilized after a rough 2012, when memory prices fluctuated and demand for components used in cars, planes, PCs and devices declined.

Revenue growth this year will be driven by DRAM, which will generate revenue of $US44.1 billion, growing by 26.3 per cent from 2013. That's also a big change from a rough 2012, when memory prices plunged to an all-time low and production dropped, resulting in a yearly revenue decline.

DRAM prices, which fluctuate widely, will put the brakes on semiconductor revenue growth in 2016, Gartner said, projecting growth of just 1 per cent that year.

The DRAM market has unexpectedly been stable for the past two years, but DRAM prices will go into a steep decline through 2016, said Jon Erensen, research director at Gartner.

"Some of the motions are already in place," Erensen said. "It's been the spark for two years in a row. You've had consolidation that has gone on, you've had vendors leave the market."

Memory is critical to devices, but the market for it is volatile. When DRAM is in short supply, memory makers crank up production and supply to meet the growing demand. The oversupply sets the stage for a bust cycle, with memory prices dropping and overall revenue falling. Memory makers then adjust factory capacity by reducing production and limiting supply, which stabilizes DRAM prices and paves the way for another growth cycle. Factors such as economic slowdowns and reduced device shipments have also affected DRAM boom-and-bust cycles.

Outside of DRAM, revenue from all other semiconductors will grow by roughly 5 percent in 2016, Erensen said.

Revenue from non-optical sensors such as accelerometers and gyroscopes will record the fastest growth, at around 13.7 per cent. The growth will be driven by the emerging "Internet of things" market, which is taking the baton as the next killer app from smartphones, Erensen said.

But like smartphones, IoT devices will use few semiconductors, and revenue will be driven by sheer volume, Erensen said.

"The challenge with IoT is it's really fragmented, and now you're getting into even smaller semiconductor content, but the volumes can be bigger," Erensen said.

Revenue from NAND flash used mainly as storage in mobile devices will also continue to grow, Erensen 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

Join the Good Gear Guide newsletter!

Error: Please check your email address.

Tags GartnerComponents

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Agam Shah

IDG News Service
Show Comments

Most Popular Reviews

Latest News Articles


GGG Evaluation Team

Kathy Cassidy


First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni


For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell


The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi


The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott


My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?