Driven by strong growth in the memory market, worldwide semiconductor revenues totaled US$420.4 billion in 2017, a 21.6% increase from 2016 revenues of US$345.9 billion, according to Gartner.

"2017 saw two semiconductor industry milestones - revenue surpassed US$400 billion, and Intel, the No. 1 vendor for the last 25 years, was pushed into second place by Samsung Electronics," said George Brocklehurst, research director at Gartner. "Both milestones happened due to rapid growth in the memory market as undersupply drove pricing for DRAM and NAND flash higher."

The memory market surged nearly US$50 billion to reach US$130 billion in 2017, a 61.8% increase from 2016, Gartner indicated. Samsung's memory revenues alone increased nearly US$20 billion in 2017, moving the company into the top spot in 2017. However, Gartner predicts that the company's lead will be short-lived and will disappear when the memory market goes into its bust cycle, most likely in late 2019.

The booming memory segment overshadowed strong growth in other categories in 2017, Gartner said. Non-memory semiconductors grew US$24.8 billion to reach US$290 billion, representing a growth rate of 9.3%. Many of the broadline suppliers in the top 25 semiconductor vendors, including Texas Instruments (TI), STMicroelectronics and Infineon, experience high growth as two key markets, industrial and automotive, continued double-digit growth, buoyed by broad-based growth across most other end markets.

The combined revenues of the top 10 semiconductor vendors increased by 30.6% during 2017 and accounted for 58% of the total market, outperforming the rest of the market, which saw a milder 11.0% revenue increase, according to Gartner.

M&As are taking longer

Gartner noted that 2017 was a slower year for closing mergers and acquisitions (M&As), with roughly half the deal value and number of deals compared with 2016. However, the semiconductor industry continues to see escalating deal sizes with greater complexity, which are becoming more challenging to close. Avago set a record in its acquisition of Broadcom for US$37 billion in 2016, and this record should soon be broken by Qualcomm's acquisition of NXP Semiconductors for US$44 billion.

The IoT is starting to pay vendor dividends

Growth in the Internet of Things (IoT) is having a significant impact on the semiconductor market, with application-specific standard products (ASSPs) for consumer applications up by 14.3% and industrial ASSPs rising by 19.1% in 2017, Gartner said. Semiconductors for wireless connectivity showed the highest growth with 19.3% in 2017, and topping US$10 billion for the first time, despite reduced component prices and the static smartphone industry.