Top 10 Semiconductor Suppliers Generate Revenue Growth of 2% in 1Q20 at $63.6 Billion Benefitting from Covid-19-Driven Increase in PC and Server Sales

Defying a decline in market revenue, the world’s top 10 semiconductor suppliers managed to generate revenue growth of 2.1% in 1Q20, as the companies benefitted from a Covid-19-driven increase in PC and server sales.

The top 10 chipmakers collectively generated revenue of $63.6 billion in 1Q20, up from $62.2 billion in 1Q19, according the Competitive Landscaping Tool (CLT) Service from Omdia, a registered trademark of Informa PLC.

This contrasts with a 2% sequential decline in the overall global chip market in 1Q20, with revenue falling to $110.1 billion, down from $112.3 billion in 4Q19.

While Omdia typically employs a Y/Y comparison for market-share growth figures, the unprecedented downturn for the semiconductor market in 2019 and the pandemic in 2020 have made annual comparisons less meaningful, prompting a focus on the sequential aspect on the semiconductor market.

“Many of the leading semiconductor suppliers benefitted from strong demand for client PCs, enterprise PCs and servers in the first quarter,” said Ron Ellwanger, senior analyst, semiconductor manufacturing. “Covid-19-driven stay-at-home orders spurred rising demand for PCs as locked-down consumers tried to remain connected with friends, family, clients and business associates. In turn, this phenomenon has stimulated demand for corporate PCs and servers, with organizations striving to accommodate increasing consumer demand for cloud services. All this demand translated into increased demand for the kinds of chips offered by the world’s top semiconductor suppliers.“

As a result of the increasing demand for computer platforms, the data-processing category was the only application market for semiconductors to attain growth during 1Q20. Data processing posted a 0.9% increase in revenue compared to 4Q19.

Memory-oriented semiconductor suppliers drove much of the growth among the top 10 suppliers, with the 3 leading companies in this area, Samsung, SK Hynix, and Micron, collectively expanding their revenue by 1.1% during 1Q20.

These companies benefitted from the growth in the data-processing market, which is generating increasing demand for NAND flash used in enterprise SSDs. Sales of NAND flash memory grew 6.9% sequentially in 1Q20, representing the highest growth rate of any device in the semiconductor market during the time period.

Qualcomm and HiSilicon lead in growth among top 10
While the memory area was the leading growth driver for the top 10, the best individual performances were posted by US wireless semiconductor supplier Qualcomm and Chinese fabless SoC firm HiSilicon. Sixth-ranked Qualcomm attained 14.6% sequential growth in 1Q20, while HiSilicon surged by a staggering 40.3%, the highest rate of expansion of any top 10 supplier.

“Qualcomm is benefitting from the Chinese government’s move to kickstart the economy by emphasizing the deployment of 5G infrastructure,” Ellwanger said. “The company is taking advantage of China’s subsidized 5G handset market, along with moves to accelerate the building of 5G infrastructure in the country.”

HiSilicon is the chip division of China’s Huawei. Despite the restrictions placed on Huawei by the US government, the company has managed to protect itself from the effects of the US/China trade war. The company is doing this by building up sufficient inventory to ride out the impact of the revised US trade restrictions, which are planned to go into effect in September.

Top 10 winners and losers
Although demand increased for PC-oriented chips in the first quarter, microprocessor chip leader Intel suffered a 1.8% drop in revenue during the period. The surge in computer demand in 1Q20 was focused on lower-end systems, increasing demand for lower cost Intel’s Intel microprocessors and chip sets, thus trimming its revenue.

KIOXIA, formerly known as Toshiba Memory, rose one rank to take the ≠10 spot, supplanting Sony Semiconductor. The company’s semiconductor revenue increased by an impressive 10%.