Technology trends and semiconductor growth in 2018
Technology is one of the most dynamic industries, as trends keep changing. The semiconductor industry often is the first to feel the impact of a technology shift, as innovation starts there. The semiconductor industry is undergoing its fourth technology shift towards AI (artificial intelligence) and IoT (Internet of Things), which led the industry to report double-digit YoY (year-over-year) growth in 2017 and 2018.
According to the World Semiconductor Trade Statistics (or WSTS), global semiconductor revenue rose 21.6% YoY in 2017 and is expected to rise 15.9% YoY in 2018. The WSTS forecasts global semiconductor revenue to rise by 2.6% YoY in 2019.
2017 was the year of AI in the cloud and PC gaming, which drove the stocks of memory chip makers and GPU (graphics processing units) and FPGA (field programmable gate arrays) makers. Memory chip supplier Micron Technology (MU) and GPU supplier NVIDIA (NVDA) made it to the list of top ten semiconductor companies of 2017 by revenue. Samsung (SSNLF) overtook Intel to become the world’s largest semiconductor company by revenue.
In 2018, AI spread beyond the cloud to the enterprise and industrial spaces. Cloud companies increased their capital spending in infrastructure, boosting demand for server CPUs (central processing unit). This trend drove stocks of CPU makers Intel (INTC) and Advanced Micro Devices (AMD) in the first half of the year.
In the first half of the year, we also saw the cryptocurrency trend, where miners purchased GPUs of AMD and NVIDIA to mine currency. However, the crypto bubble burst in April, which wiped away all windfall gains, sending the two stocks crashing in the second half.
However, PC demand picked up in 2018 as enterprises upgraded to Microsoft’s (MSFT) Windows 10, driving Intel’s revenue to new highs.
In 2019, we have a major technology shift on the horizon to 5G (fifth generation), autonomous vehicles, AR/VR (augmented/virtual reality), and AI. The first half of the year is likely to be slow for the semiconductor industry with the adoption of the above technologies picking up in the second half.
In this series, we’ll look at the top trends that could impact the semiconductor industry in 2019.
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