Semiconductor revenue rose 7.6% in Q3 2021 from Q2 2021 and climbed above $150 billion in revenue during 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 the chip shortage, seasonal demand, and strong memory revenue.
The solid quarter experienced by the memory market also drove a shakeup amongst the top 10 companies in the sector by revenue, as Samsung Electronics overtook Intel to claim the number one spot in the rankings for the quarter on the strength of Samsung’s memory business, according to Omdia.
Beginning in and including Q4 2020, each quarter since has set a new revenue record for the semiconductor industry. Data in the Q3 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 caused an abrupt shift towards a more technology-focused global economy. Increased demand for electronics and the resulting shortages for some semiconductor parts raised average selling prices (ASPs) and revenue for companies throughout the semiconductor industry.
In addition, Q3 traditionally sees increased seasonal demand as the semiconductor industry gears up for holiday demand. The long-term quarterly growth for Q3 is 7.9%, with the next best long-term quarterly growth average in Q2 at 3.7%.
Despite the record revenue that the semiconductor market is currently experiencing, the growth rate of the recently completed quarter is average at 7.6% compared against the long-run average of 7.9%. (See figure below.)
The primary driver of the 7.6% growth rate for semiconductor revenue in Q3 2021 was the memory sector. Memory (DRAM, NAND and NOR) makes up 29% of all semiconductor revenue. This segment grew 12% quarter-over-quarter in Q3 2021.
Only display drivers (13% QoQ) and image sensors (17% QoQ) experienced stronger growth, but the memory market is five times larger than these two markets combined. The size of the memory market means it influences the overall semiconductor market. For example, if memory revenue is removed, the remaining semiconductor market grew, but at a rate below the historical average in Q3 from Q2. (See figure below.)
NAND market leading growth in the semiconductor industry
Within memory, the NAND market grew to its highest ever quarterly revenue, jumping from $16.4B to $18.7B.
Craig Stice, Omdia chief analyst for semiconductor research, commented: “Preliminary data shows the NAND market reached nearly $18.7 billion in 3Q21, an impressive QoQ increase of 13.8%. The NAND market was fueled by strong shipment growth to meet demand coming out of the enterprise and data center markets, as well as stable demand out of the smartphone market. Additionally, average selling prices in 3Q21 saw a near 5% QoQ increase as supply and demand remained slightly out of balance.”
Top-10 Market Share
After 11 straight quarters as the number one ranked semiconductor firm, Intel slipped to number two behind Samsung Electronics as the memory segment, where Samsung is the number one DRAM and NAND supplier, was the largest growth area for semiconductors in Q3 2021.
Memory semiconductor revenue rose 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 educate-from-home has benefitted the memory sector.
Intel, the largest MPU maker, was limited as overall MPU revenue in Q3 2021 was nearly flat, up just 0.5%, according to Omdia.
Memory-focused semiconductor firms (Samsung Electronics, SK Hynix, and Micron Technology) made up three of the top four semiconductor firms in Q3 2021 and continue to dominate the quarterly revenue rankings.