Rising Profits
The global semiconductor market is seeing phenomenal growth driven by a handful of corporations in the U.S. and Korea.
According to the Semiconductor Industry Association (SIA)’s announcement on May 5, the global semiconductor industry recorded the highest ever first quarter revenue this year at US$78.5 billion.
Last March’s sales stood at US$26.2 billion, up 11.4 percent year-on-year, and saw an increase from Feb.’s sales of US$26 billion.
By region, for the first time in three years, sales grew evenly throughout the world, but most noticeably in America and Asia.
Compared to last year, by region, the highest growth was recorded in America with 16.1 percent, followed by the Asia-Pacific led by Korea and Taiwan with 12.9 percent.
Sales edged up also in Europe (8.0 percent) and Japan (0.4 percent) year on year.
Compared to last year’s fourth quarter, sales slipped in Japan and the U.S., while they continued apace in Europe and Asia.
American and Japanese markets saw sales dipping at 12.2 percent and 3.8 percent respectively, while Europe and Asia-Paciifc saw increments of 3.9 percent and 1.4 percent, respectively, reflecting an economic warm-up in the European market.
The upswing trend is anticipated to be a boon for local companies such as Samsung Electronics and SK Hynix, since the market for their flagship memory semiconductor products is somewhat saturated.
Korea Investment and Securities’ researcher Seoh Won-sok said, “The DRAM industry went through an extreme case of a business cycle, ending up wedging a big gap between industry leaders and followers in the meantime. 26 companies in the 1990s dwindled to Samsung Electronics, SK Hynix, and Micron Technology now. Therefore, profit maximization in these companies is anticipated via investment regulation easing, production volume control, and price stabilization.”
The companies’ figures seem to validate the opinion. Samsung Electronics’ sales and operating profits in the first quarter jumped by 9.4 percent and 82.2 percent, respectively, while SK Hynix’s sales and operating profits surged 34.6 percent and 348.9 percent, respectively, in the cited period.
SIA CEO Brain Toohey said recent semiconductor sales are encouraging, but one threat to the semiconductor market’s continued growth is the “the innovation deficit - the gap between needed and actual federal investments in research and higher education.” He said that policymakers should act swiftly to close the innovation deficit by committing to “robust and sustained investments in basic scientific research and higher education.”