Chip suppliers struggle as semiconductor sales drop

According to the latest report from IC Insight, eight of the top 10 semiconductor suppliers logged annual declines in 1Q16 sales compared with 1Q15, with several seeing sales fall by 25% or more. In total, Q1 chip sales were down by about 6% compared to 1Q15, according to the Semiconductor Industry Association trade group. IC Insights estimated that Q1 chip sales plunged by roughly 7%.

Six of the top 10 semiconductor sales leaders experienced YoY revenue drops of greater than 10%, according to the list compiled by IC Insights. The IC Insights top 20 supplier list includes integrated device manufacturers as well as three semiconductor foundries and six fabless companies.

Of the top 10 suppliers, only market leader Intel Corp., which saw its Q1 sales grow by 9% compared with 1Q15, posted a significant YoY sales increase in Q1, according to the report. South Korea's Samsung Electronics Co. Ltd, the No. 2 supplier of semiconductors, posted Q1 chip sales that were essentially flat with 1Q15, IC Insights said.

Figure 1: IC Insights revealed that eight of the top 10 semiconductor suppliers saw posted annual declines in Q1 sales compared with 1Q15, with several seeing sales fall by 25% or more.

Cumulatively, sales from the top 20 chip suppliers declined by 6% in Q1 compared with 1Q15, IC Insights said. Seven of the top 20 suppliers experienced a YoY revenue drop of 25% or more, the firm said.

Underscoring the current down cycle for memory chips, suppliers Micron Technology Inc. and SK Hynic Inc. posted the largest YoY declines in Q1 sales among the top 20 suppliers. SK Hynix posted a 30% YoY decline in sales, while Micron's sales tumbled by 28%, IC Insights said.

Advanced Micro Devices Inc. (AMD) returned to the top 20 chip supplier list in Q1, despite posting Q1 sales that were down 19% compared with 1Q15, IC Insights said. Sharp Corp. experienced a 30% decline in YoY Q1 sales and fell from the top 20 ranking as a result, IC insights said.

IC Insights said sales results for companies that have merged over the past year were combined for both 1Q15 and 1Q16, regardless of when the merger occurred, to provide more useful YoY comparison. The market research firm said it expects more upheaval in the top 20 supplier list to occur as the semiconductor industry continues a period of unprecedented consolidation.

- Dylan McGrath
  EE Times