Worldwide Chip Sales Inched Up In 2007

Datamation content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.

Intel’s dominance of the semiconductor sector continues unabated as the chip giant increased its total market share in 2007 to 12.2 percent, well ahead of Samsung, Toshiba and the other chipmakers, according to a report by Gartner.

The overall worldwide semiconductor market grew a mere 2.9 percent in revenue to $270.3 billion in 2007, with most of the firms posting single-digit growth or slight declines. While Intel’s share was the largest, it did not have the best growth of the top 10 companies on Gartner’s list. That honor went to Toshiba and Hynix Semiconductor.

AMD’s warning on Wednesday that ATI’s consumer electronics business suffered due to problems with a mobile phone maker served as a cautionary tale for diversifying one’s business, according to Gerald Van Hoy, an analyst with Gartner who conducted the survey.

“Any a situation where you have all your eggs in one basket is not a good thing,” he told InternetNews.com. “Then you are dependent on someone else’s marketing, someone else’s everything. If they get their lunch eaten by anyone, it directly affects you.”

Its diversity of customers and, of all things, a 45 percent growth in its CMOS image sensors was credited for Toshiba’s 27.8 percent increase this year. What’s a CMOS image sensor? It’s used in a cell phone camera, a feature that’s found in virtually every cell phone manufactured these days. Toshiba had a healthy mix of cell phone customers, and that business served the company well.

Toshiba also sells chips used in HDTV sets and that market remains strong as well. Toshiba had 4.6 percent of the market with $12.5 billion in sales.

The other bit of strength for Toshiba was NAND (define) flash memory, which was a hot market for all chipmakers. Hynix Semiconductor, which makes both flash and standard DRAM, was up 20.2 percent for the year, with strong flash memory sales chiefly responsible for moving it up to seventh place on the chart

Hynix’ and other chipmakers’ growth surely wasn’t the result of strong DRAM sales and margins.

Van Hoy said there has been a serious oversupply of DRAM, which has caused prices to plunge. He said he was surprised to see increasing capex (capital expenditures) in DRAM, meaning the vendors aren’t going to stop manufacturing DRAM chips any time soon. “Normally when there’s an oversupply you see an easing off, but not in this case,” he said.

Intel rode the strength of the mobility market, which has been growing steadily while desktop sales continue to slip. The company doesn’t sell memory but it does sell plenty of CPUs and chipsets. This resulted in $32.9 billion in sales in 2007, an 8.2 percent increase.

Intel has a modest flash business, which it is spinning off in a joint venture with STMicroelectronics, which was No. 5 on Gartner’s list with 3.7 percent of the worldwide market share.

The outlook for 2008 is somewhat murky due to concerns about the overall state of the economy.

“The macro economic situation is the big thing right now,” said Van Hoy. “Right now we show that there’s a 30 percent chance of a recession, in which case the market might drop. What’s more likely, about 40 percent, is a chance for a flat year—and there’s a 10 percent chance for a robust year.”

DRAM is likely to remain in overabundance, meaning low prices, and flash will likely remain strong. But it all depends on where the economy goes.

“A lot of flash is tied into consumer spending,” said Van Hoy.

This article was first published on InternetNews.com.