Chips are up as iPhone drives strong semiconductor market growth

Worldwide semiconductor revenue is on pace to reach $336 billion in 2014, a 6.7 percent increase from 2013, and up from the previous quarter's forecast of 5.4 percent growth

According to Gartner, sequential growth in the second quarter of 2014 is outpacing expectations, as can be seen in many companies including foundry leader TSMC, which is expecting second-quarter sequential growth of over 20 percent.

"2014 semiconductor growth is widespread across many chip types and applications," says Bryan Lewis, research vice president at Gartner.

"DRAM is once again expected to lead in 2014 with 18.8 percent annual growth, but other areas are also doing well, including analog, FPGAs, ASICs, and nonoptical sensors.

"ASICs are driven by Apple, with strong sales of its iPhone expected in the second half of 2014. ASICs will also benefit from the strong ramp of the latest video game console generation, particularly the Sony PS4 and Microsoft Xbox One.

"Overall semiconductor growth is widespread, with the nonmemory segment growing 5.2 percent in 2014, compared with only 0.8 percent in 2013."

DRAM pricing remains firm, and this, coupled with growth in key system markets, is helping propel the DRAM market to exceed $41 billion in 2014.

Memory is a feast-and-famine market due to big supply and demand cycles, and Gartner predicts the next big memory oversupply downturn to hit in 2016, weakening overall semiconductor growth.

"Smartphones and ultramobile devices, including tablets, are the growth areas from a system point of view," adds Ranjit Atwal, research director at Gartner.

"Traditional desk-based PCs and notebook units are continuing to decline 6.7 percent in 2014.

"Total production unit growth for ultramobile devices, including tablets, is expected to rise over 30 percent in 2014. Low-cost utility tablets (white box) continue to drive new growth in the tablet market."