International. Semiconductor revenue increased 7.6% in the third quarter of 2021 from the second quarter of 2021 and exceeded $150 billion in revenue for a single quarter for the first time since research group Omdia began tracking the market in 2002. Omdia experts say the development has been driven by chip shortages, seasonal demand and strong memory revenue.
The strong quarter experienced by the memory market also prompted a reorganization among the top 10 companies in the sector by revenue, as Samsung Electronics overtook Intel to claim the number one spot in the quarter's rankings thanks to the strength of Samsung's memory business, according to Omdía.
As of the fourth quarter of 2020 inclusive, every quarter since then has set a new revenue record for the semiconductor industry. Data from the third quarter release of Omdia's Semiconductor Competitive Landscape Tool (CLT) shows:
20Q4, $130.7B
21Q1, $131.9B
21Q2, $142.4B
21Q3, $153.2B
The global pandemic sparked an abrupt shift toward a more technology-centric global economy. Increased demand for electronics and the resulting shortage of some semiconductor parts drove up average selling prices (ASPs) and revenues for companies across the semiconductor industry.
In addition, the third quarter traditionally sees increased seasonal demand as the semiconductor industry prepares for holiday demand. Long-term quarterly growth for the third quarter is 7.9%, with the next best long-term quarterly growth average in the second quarter at 3.7%.
Despite the record revenue that the semiconductor market is currently experiencing, the growth rate for the recently ended quarter is an average of 7.6% compared to the long-term average of 7.9%. (See figure below.)
The main driver of the 7.6% growth rate of semiconductor revenue in the third quarter of 2021 was the memory sector. Memory (DRAM, NAND, and NOR) accounts for 29% of all semiconductor revenue. This segment grew 12% quarter-over-quarter in the third quarter of 2021.
Only display controllers (13% quarter-on-quarter) and image sensors (17% quarter-on-quarter) experienced higher growth, but the memory market is five times larger than these two markets combined. The size of the memory market means that it influences the overall semiconductor market. For example, if memory revenue is eliminated, the remaining semiconductor market grew, but at a slower pace than the historical average in the third quarter of the second quarter. (See figure below.)
NanD Market Leading Growth in semiconductor industry
As you may recall, the NAND market grew to its highest quarterly revenue ever seen, jumping from $16.4 billion to $18.7 billion.
Craig Stice, chief analyst for semiconductor research at Omdia, commented: "Preliminary data shows that the NAND market reached almost $18.7 billion in 3Q21, an impressive quarter-on-quarter increase of 13.8%. enterprise and data center markets, as well as stable demand from the smartphone market. In addition, average sales prices in 3Q21 experienced a quarter-on-quarter increase of close to 5%, as supply and demand remained slightly unbalanced."
Market share of the top 10
After 11 consecutive quarters as the number one semiconductor company, Intel fell to number two behind Samsung Electronics, as the memory segment, where Samsung is the number one supplier of DRAM and NAND, was the fastest growing area for semiconductors in the third quarter of 2021.
Memory semiconductor revenue increased 17% in 21Q2 from 21Q1 and another 12% in 21Q3 from 21Q2, lifting Samsung above Intel. Strong demand for DRAM and NAND to support applications and infrastructure for work-from-home and homeschooling has benefited the memory sector.
Intel, the largest MPU maker, was constrained as overall MPU revenue in the third quarter of 2021 was nearly flat, up just 0.5%, according to Omdia.
Memory-focused semiconductor companies (Samsung Electronics, SK Hynix, and Micron Technology) made up three of the top four semiconductor companies in the third quarter of 2021 and continue to dominate quarterly revenue rankings.
Source: Omdia.
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