Feb 4, 2019 - Economy

Chip sales had a record 2018, but a slowdown looms

Manufacturing a semiconductor wafer.

Manufacturing a semiconductor wafer. Photo: Alfredo Sosa/The Christian Science Monitor via Getty Images

Global chip sales rose nearly 14% last year to a record $468.8 billion, according to new numbers from the Semiconductor Industry Association. However, growth slowed significantly in the second half as the industry enters what appears to be a period of slower growth.

Why it matters: Chips are at the heart of all manner of electronics, from phones and PCs to broader markets like cars and appliances. Plus, unlike the gear they end up in, a significant number of semiconductors are not only designed in the U.S. but also manufactured here.

  • Chip sales growth is seen slowing to just 2.6% this year, according to the World Semiconductor Trade Statistics organization.
  • "We may be moving into a cyclical period [where we are] experiencing slower growth," SIA CEO John Neuffer said in an interview. But he added that the industry's long-term outlook is "very strong" as more chips go into more products.

Slowing growth: Several factors are weighing on the chip business, beyond the fact that it is a cyclical industry that has boomed for the last couple of years. In particular, there are concerns that the U.S.-China trade dispute as well as a slowing domestic Chinese market for consumer electronics could be hurting business.

  • "We want this to get resolved," Neuffer said. "We want the tariffs to get lifted."
  • Ideally, he said, the issues would be resolved in a way that increases intellectual property protections, a key concern for the U.S. high tech community.

By the numbers:

  • Total chip unit shipments topped 1 trillion for the first time.
  • Memory was the largest and fastest growing type of semiconductor, with sales up 27.4% to $158 billion.
  • Sales in 2018 rose in every region, led by China, where sales were up 20% for the year.

Go deeper: Computer chips are still "Made in USA"

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