Memory drives semiconductor industry growth
The semiconductor industry is one of the hottest industries in the market, as the fourth technology shift to AI (artificial intelligence) and IoT (Internet of Things) is driving demand for semiconductors.
In July 2017, Jefferies analyst Mark Lipacis stated that NVIDIA (NVDA) would be the biggest beneficiary of the technology shift, whereas Intel (INTC) would stand to lose from the shift. Serving both companies is Micron Technology (MU), which could benefit in the near term.
Many research companies expect double-digit growth in the semiconductor industry (SMH) in calendar 2017, and they identify memory as the key growth driver.
Semiconductor industry forecast
Gartner expects the semiconductor market to grow 16.8% YoY (year-over-year) to peak at $400 billion in 2017, with the largest growth of 52.0% coming from the memory market. The research firm stated that Micron would benefit from increasing adoption of AI and machine learning in various industries. This trend could reduce Micron’s exposure to cyclical demand and stabilize its growth due to specialized memory.
WSTS (World Semiconductor Trade Statistics) expects the semiconductor market to grow 17.0% YoY in 2017, with the largest growth of 50.5% coming from the memory market.
IC Insights expects the semiconductor market to grow 16.0% YoY in 2017, with the largest growth coming from the memory market. It expects the DRAM[1. dynamic random access memory] market to grow 55.0% and the NAND[2. negative AND] flash market to grow 35.0% in 2017, mostly driven by high prices. It expects the semiconductor market (excluding memory) to grow just 6.0% YoY in 2017.
IC Insights stated that this 16.0% growth would be the semiconductor industry’s first double-digit growth since 2010 and its fifth double-digit growth since 2000.
Micron would benefit not only from the strong semiconductor industry trend but also from the strong memory market trend. We’ll look at the memory trend in the next part of this series.