Gartner: DRAM sales to spur semiconductor market recovery in 2014

PC production expected to drop as enterprises postpone new purchases

The market for dynamic random-access memory (DRAM) chips used in PCs and other electronic devices will not recover until the second half of 2013, predicts the latest Gartner forecast.

However, the DRAM market is expected to rebound in 2014, posting 15.3 percent growth. This should spur an overall recovery in the semiconductor market, which is expected to reach $342 billion in revenue in 2014, a 9.9 percent increase from the $311 billion in 2013, the firm predicted.

Gartner analysts lowered their 2013 projection for semiconductor revenue from a previous $330 billion due to "economic headwinds and an inventory correction." In addition, the firm lowered its revenue projections for 2012 to $298 billion from $309 billion.

"The looming fiscal cliff, ongoing European debt crisis, slower emerging market growth and regional tensions have all played a part in reduced growth projections for semiconductor revenue in both 2012 and 2013. Inventory levels were already high at the start of the second half of 2012, and as PC demand rolled off, supply simply overshot demand," said Peter Middleton, principal analyst at Gartner.

The market research firm estimated overall PC production would decline 2.5 percent this year and remain weak in 2013. Gartner attributed the PC slowdown to the economic environment, which is forcing enterprises and other users to postpone PC purchases. At the same time, production of ultramobile PCs will grow strongly, starting from a small base.

The research firm predicted strong growth in NAND and application-specific integrated circuits (ASICs), which are expected to see revenue increases of 17.2 percent and 9.4 percent respectively. ASIC revenues are expected to be fueled by a new generation of video game consoles being introduced in late 2012 and 2013.

Tablet production is expected to benefit from the PC slowdown as users purchase new tablets instead of new PCs. Production is expected to increase 38.5 percent to 207.1 million units in 2013, up from a previous forecast of 169.8 million units. Gartner said the success of the Amazon (Nasdaq: AMZN) Kindle Fire, Google (Nasdaq: GOOG) Nexus 7 and Apple (Nasdaq: AAPL) iPad Mini demonstrates the opportunity for smaller tablets, and the no-brand tablet market will be stronger than previously anticipated.

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