Samsung's Semiconductor Lead In 2017 "Built On Sand:" Gartner

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Samsung's recently acquired leading position in the semiconductor industry "is literally built on sand," Gartner Research Vice President Andrew Norwood said Thursday as part of the firm's review of the global chip market in 2017. The Stamford, Connecticut-based business analytics company estimates Samsung's semiconductor operations grew by 52.6 percent in the last 12 months and accounted for 14.6 percentage points of the market but states that its memory silicon-based dependance is unlikely to fare well for the company going forward as its rivals are now ramping up their manufacturing operations while the worldwide demand for memory chips is on the brink of a major decline.

Over the course of this year, Samsung may fall to the third place in the global memory chip race and be surpassed by both Intel and Broadcom, Mr. Norwood believes. Besides falling prices that are a direct reflection of a weakening demand, the fact that Chinese manufacturers are now ramping up their production capacities will also significantly affect Samsung's bottom line, as per the same industry analyst. While Intel is likely to take back its title of the world's largest chipmaker, Broadcom may only surpass Samsung should it somehow manage to complete its hostile takeover of Qualcomm, which is far from a guaranteed scenario, albeit one that warrants consideration in light of Broadcom's aggressive attempts to replace Qualcomm's board at the San Diego-based firm's annual shareholder meeting in March. Should it be able to do so, the only thing standing in the way of its proposed merger would be regulatory scrutiny which would certainly be intense but not insurmountable, some industry watchers previously said. Seeing how an acquisition of Qualcomm would also be likely to bring NXP under Broadcom's corporate umbrella, the international chipmaker would have little issues with outperforming Samsung in such a scenario.

Gartner's remarks about Samsung's near-term prospects in the semiconductor industry are in line with the majority of related predictions made by other industry analysts in recent months, with many of them downgrading their outlooks for Samsung's Q4 2017 performance due to a widespread belief that the firm's record-breaking results posted in previous quarters are largely unsustainable. While the company is still projected to post a massive year-on-year improvement in terms of pure profit, its business results in the final quarter of 2017 are likely to signal a decline in its semiconductor performance and the start of a trend that's unlikely to be reversed anytime soon as its rivals finally manage to catch up with the demand Samsung previously managed to predict and consequently lower the prices of memory chips on a global level.

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