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Despite Skylake launch, PC semiconductor sales to decline in 2015 – Gartner

The launch of Windows 10 and Intel’s Skylake architecture is likely to happen in the third quarter of 2015, and this would give a boost to semiconductor sales along with factors such as tablet and smartphone markets, Gartner said.

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The market research firm forecast a 4% growth for semiconductor sales in 2015, boosted primarily by mobile, SSDs and tablets. Despite the Intel and Microsoft refresh, sales of semiconductor parts in the PC market will experience its greatest decline this year, it added.

“The next critical season for the PC and ultramobile markets is in the third quarter of 2015, when Windows 10 and Intel’s Skylake products come to market,” it said. However, consumers are unlikely to show much enthusiasm to upgrade their systems just because Windows 10 launched, it added.

“The end of support for Windows XP, which lifted the replacement demand for traditional PCs, particularly in the professional market, faded out in late 2014. Through 2015, the replacement demand is expected to remain muted, as consumers delay migrating to Windows 10.”

Worldwide semiconductor revenue is forecast to reach $354 billion in 2015, impacted also by the strengthening dollar. “Concern is mounting about semiconductor revenue growth in 2015 as system suppliers start to grapple with the rapid depreciation in value of global currencies relative to the U.S. dollar, excess inventories in the semiconductor and electronics supply chains, and the end of a PC upgrade cycle,” said Bryan Lewis, research vice president at Gartner.

The strong dollar is causing system suppliers and system buyers to re-evaluate their strategies, it said.

System suppliers will raise prices in select regions such as Europe to keep their margins intact as well as de-feature some products to maintain current price points. System buyers will push out purchases in select regions, extending product life cycles as well as buying down the price curve. All this leads to reduced semiconductor growth in 2015.

From an application point of view, smartphones, solid-state drives (SSDs) and ultramobiles will see the largest semiconductor growth, while the traditional PC segment will experience the greatest decline.

From a device point of view, DRAM continues to be one of the primary growth drivers of the overall industry. DRAM revenue is expected to increase 7.9 percent in 2015, following a 32 percent increase in 2014. However, Gartner maintains its view that the good times in DRAM will come to an end in 2016 and 2017 when the DRAM industry revenue will decline 20.2 percent and 8.4 percent, respectively. While this may seem like a dire outlook, it is actually slightly better than the previous quarter’s forecast for 2016 and 2017 declines of 30.1 percent and 20.0 percent, respectively.

“2015 semiconductor growth hinges on the strength of the second-quarter bounce,” said Mr. Lewis. “The second quarter is traditionally where we see strong sequential growth coming off the traditionally negative first quarter as inventory is burned off from the holidays. First quarter 2015 looks to have the worst sequential growth since 2009 with at least a 7 percent decline, so a strong second-quarter bounce is needed to achieve the 4 percent annual growth predicted for 2015. Intel’s recent second quarter’s mid-point sequential revenue guidance of a 3.3 percent increase was in-line with the expected industry re-bound after it experienced a 13.2 percent sequential decline in the first quarter of 2015.”

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