Worldwide semiconductor revenue is forecast to reach $US358 billion in 2015, a 5.4 per cent increase from 2014, but down from the previous quarter's forecast of 5.8 percent growth.
According to Gartner, the market is being driven by strong growth in application-specific standard products (ASSPs) in smartphones, along with DRAM and NAND flash in ultramobiles and solid-state drives (SSDs).
"Semiconductor revenue growth in 2015 is expected to slow from the 7.9 pe rcent growth experienced in 2014 as DRAM returns to more traditional price reductions and the industry burns off excess holiday inventory," says Jon Erensen, research director, Gartner.
"DRAM pricing was unusually firm in 2014 due to short supply, which propelled DRAM to be the fastest-growing device type in 2014 with 31.7 per cent revenue growth.
"DRAM supply and demand will be in line in 2015, driving bit pricing down a more traditional 16.8 percent and reducing annual DRAM revenue growth to 7.7 per cent."
From an application point of view, Gartner predicts that smartphones, SSDs and ultramobiles will see the largest dollar increases.
In 2015, compute applications will continue to be the largest market for semiconductors, followed by wireless and consumer applications.
Combined, these three device categories represent more than two-thirds of total semiconductor revenue and have the most influence on the overall strength of the semiconductor market.
However, in 2015, Erensen predicts that the industrial electronics segment is expected to outperform overall semiconductor market growth and other electronic application categories with revenue growth of 9.1 per cent.
The growth will be driven mainly by LED lighting applications for industrial and residential purposes and smart city projects.
In addition, the Internet of Things (IoT) will continue to drive very strong unit growth in 2015 and beyond.
Following industrial applications, wireless applications — driven mainly by mobile phones — will be the next biggest growth market for semiconductors in 2015.
However, the 2015 revenue growth forecast for wireless applications, and specifically mobile phones, remains the same as the previous quarter's forecast.
"While mobile phone semiconductor sales will remain robust, driven by the accelerating shift to smartphones and 4G Long Term Evolution, there is concern that weak sell-through for other electronic equipment categories will result in higher inventory levels and drag down semiconductor sales in the first quarter of 2015," Erensen adds.