Skip to main content

Growth Challenges Drive Semiconductor Market M&A

Semiconductors are the heart of information technology and telecommunications systems. Worldwide semiconductor revenue totaled $343.5 billion in 2016 -- that's a 2.6 percent increase from 2015 revenue of $334.9 billion, according to the latest global market study by Gartner.

The top 25 semiconductor vendors' combined revenue increased 10.5 percent, a significantly better performance than the overall industry's growth. However, most of the reported growth resulted from vendor merger and acquisition (M&A) activity.

Semiconductor Sector Market Development

"The semiconductor industry rebounded in 2016, with a weak start to the year, characterized by inventory correction, giving way to strengthening demand and an improving pricing environment in the second half," said James Hines research director at Gartner.

Worldwide semiconductor revenue growth was supported by increasing production in many electronic equipment segments, improving NAND flash memory pricing and relatively benign currency movements.

Intel retained its number one position as the largest semiconductor manufacturer and grew its semiconductor revenue 4.6 percent in 2016. Samsung Electronics continued to maintain the No. 2 spot with 11.7 percent market share.

Consolidation continued to play a major role in the market share rankings, with several large companies growing through acquisitions.

Merger and acquisition activity among the major vendors in 2016 included Avago Technologies' acquisition of Broadcom Corp. to become Broadcom Ltd., On Semiconductor's acquisition of Fairchild Semiconductor, and Western Digital's acquisition of SanDisk.

The largest mover in the top 25 was Broadcom Ltd., which moved up 12 places in the market share ranking.

Gains for Overall Semiconductor Sector

"The combined revenue of the top 25 semiconductor vendors increased by 10.5 percent during 2016 and accounted for a 74.9 percent share, outperforming the rest of the market, which saw a 15.6 percent revenue decline," said Mr. Hines.

However, according to the Gartner assessment, these results are skewed by the large amount of M&A activity during 2015 and 2016. If you adjust for this M&A activity by adding the revenue of each acquired company to the revenue of the acquirer for both 2015 and 2016, then the top 25 vendors would have experienced a 1.9 percent revenue increase, and the rest of the market would have increased by 4.6 percent.

Popular posts from this blog

Global Digital Business and IT Consulting Outlook

Across the globe, CEOs and their leadership teams continue to seek information and guidance about planned Digital Transformation initiatives and the most effective enterprise organization change management practices. Worldwide IT and Business Services revenue will grow from $1.13 trillion in 2022 to $1.2 trillion in 2023 -- that's a 5.7 percent year-over-year growth, according to the latest market study by International Data Corporation (IDC). The mid-term to long-term outlook for the market has also increased -- the five-year CAGR is forecast at 5.2 percent, compared to the previous 4.9 percent. Digital Sevices & Consulting Market Development IDC has raised the growth projection despite a weak economic outlook, because of vendor performances across 2022, growth indicators from adjacent markets, increased government funding, and inflation impacts. The actual 2022 market growth was 6.7 percent (in constant currency), which was 87 basis points higher than forecast last year, alth

Digital Talent Demand Exceeds Supply in Asia-Pac

Even the savviest CEO's desire for a digital transformation advantage has to face the global market reality -- there simply isn't enough skilled and experienced talent available to meet demand. According to the latest market study by IDC, around 60-80 percent of Asia-Pacific (AP) organizations find it "difficult" or "extremely difficult" to fill many IT roles -- including cybersecurity, software development, and data insight professionals. Major consequences of the skills shortage are increased workload on remaining digital business and IT employees, increased security risks, and loss of "hard-to-replace" critical transformation knowledge. Digital Business Talent Market Development Although big tech companies' layoffs are making headlines, they are not representative of the overall global marketplace. Ongoing difficulty to fill key practitioner vacancies is still among the top issues faced by leaders across industries. "Skills are difficul

Mobile Device Market Still Awaiting Recovery

The mobile devices market has experienced three years of unpredictable demand. The global pandemic, geopolitical pressures, supply chain issues, and macroeconomic headwinds have hindered the sector's consistent growth potential. This extremely challenging environment has dramatically affected both demand and supply chains. It has led to subsequent inflationary pressures, leading to a worsening global cost of living crisis suppressing growth and confidence in the sector. In tandem, mobile device industry stakeholders have become more cautious triggering market uncertainties. Mobile Device Market Development Operating under such a backdrop, the development of mobile device ecosystems and vendor landscapes have been impacted severely. Many of these market pressures persisted throughout 2022 and now into 2023, borne chiefly by the smartphone market. According to the latest worldwide market study by ABI Research, worldwide smartphone shipments in 2022 declined 9.6 percent Year-over-Year