The Entire Semiconductor Market Just Suffered the Worst Downturn in a Decade

If all you’re paying attention to is the major news coming out of shows like Computex, the PC market seems to be going great guns. DRAM prices have fallen. New 7nm CPUs from AMD and 10nm CPUs from Intel are poised to deliver further gains. But underneath the hood, the semiconductor firms have taken a collective beating.

Global chip sales fell to $101.2B in Q1 2019, down from $116.2B in Q1 2018. This represents the largest year-on-year decrease since the depths of the Great Recession according to IHS Markit. The largest whack hit Samsung, whose sales fell 34 percent year-on-year as the bottom fell out of both the NAND and DRAM markets. Prices on both of these components have improved dramatically. Memory chips, IHS notes, were responsible for most of the plunge — remove their impact, and sales fell by 4.4 percent. But the “dismal plunge,” was caused by other factors as well, including falling demand in major markets.

It’s not exactly hard to tell which companies are exposed to the NAND and DRAM markets by looking at these charts. Intel has regained its #1 spot at the top of the market thanks to Samsung’s massive decline. While everyone’s revenue fell, the only other non-memory company to take such a hit was Nvidia, which is working through an RTX inventory rise, a steep drop-off in data center sales, and comparing backwards to a quarter when crypto sales were still driving the market. Nvidia’s comparative financials will improve in Q2 and after, once we exit the period in time during which it was enjoying inflated crypto sales.

The overall market for chips for compute applications fell 16.7 percent in Q1 2019. Interestingly, IHS claims that Nvidia’s sales fell in part due to direct graphics competition from AMD in the data center. This is the first time we’ve heard that claim made — AMD hasn’t said much about its data center sales volume or overall performance, but the company’s overall position in data centers and the AI/ML markets it wants to break into has been considered to be quite weak. We’ve looked into this topic somewhat because of questions about GPU AI and ML benchmarks. The truth is, it’s difficult to even find people who are working with AMD cards. The reasons are multi-faceted, including factors like the relative state of OpenCL maturity and compatibility as compared to CUDA.

Right now, the major players in industry are still predicting a recovery in the back half of the year. We should know soon whether or not there’s any truth to this, as leading economic indicators will start to tip up before we actually get formal economic reports. With concerns about Brexit and the EU likely to flare around Halloween and the ongoing US – China trade war, the semiconductor market’s full-year 2019 performance is still uncertain.

In fact, there’s a lot of uncertainty baked into the semiconductor market now, even at a more granular level. Qualcomm has been declared a massive monopolist and its entire revenue generation system could be permanently altered as a result. Nvidia is attempting to convince consumers to pay a significant premium for ray tracing support. AMD’s new 7nm CPUs and GPUs are expected to boost its own efforts to regain market share. There are questions about Intel’s own 10nm efforts and its upcoming Ice Lake CPUs. There are questions about how the US’ banning of sales to Huawei will impact the larger semiconductor market and how China will respond if one of its flagship companies is badly damaged. How these trends and issues play out will impact how the rest of 2019 shapes up.

Continue reading

Scientists Confirm the Presence of Water on the Moon

Scientists have confirmed the discovery of molecular water on the moon. Is there any of it in a form we can use? That's less clear.

Scientists Find Planet Where It Rains Molten Rock

The ground is rock, the seas are rock, and yes, even the air is rock.

Scientists Develop Nasal Spray That Can Disable Coronavirus

In a newly released study, the concoction was effective at deactivating the novel coronavirus before it could infect cells.

Scientists 3D Print Microscopic USS Voyager With Its Own Propulsion

It doesn't have warp engines, but it can get along fine with the help of hydrogen peroxide and platinum.