Global semiconductor industry grew more than 20 per cent in 2017 on strong memory chip and NAND flash demand

Memory chip price spike also helps Samsung overtake Intel in semiconductor revenue, according to Gartner

The global semiconductor industry grew by 21.6 per cent in revenue terms last year due to strong demand for memory chips and NAND flash storage, according to analyst group Gartner.

Turnover exceeded $420 billion in 2017 - up from $345.9 billion in 2016 - and Samsung took top spot from Intel as the world's largest semiconductor company by revenue, largely due to the spike in demand and prices for memory chips.

Indeed, according to Gartner, the memory chip market grew by $50 billion to $130 billion, up by 61.8 per cent. Samsung, as the world's largest producer of memory chips, benefited as a result.

However, the memory chip market is highly volatile, with producers enjoying big profits when demand - and, therefore, prices - is high, but often struggling to justify investments in commodity memory when boom turns to bust.

Gartner suggests that the current cycle will be "short-lived" and "will disappear when the memory market goes into its bust cycle". It said that this will "most likely" happen by the end of 2019.

Non-memory semiconductors grew by $24.8 billion to $290 billion, according to Gartner, but is generally less prone to boom and bust cycles.

Suppliers such as Texas Instruments, STMicroelectronics and Infineon enjoyed double-digit growth in the industrial and automotive industries, according to Gartner.

During 2017, the ten biggest semiconductor vendors saw their collective revenues increase by 30.6 per cent and made up 58 per cent of the total market.

Gartner said they outperformed the rest of the market, which only enjoyed an 11 per cent increase in revenues.

While revenues in the semiconductor industry grew rapidly, Gartner said 2017 was a "slower year" for mergers and acquisitions (M&As) in the area.

There were only half the number of deals closed compared to 2016, and for the acquisitions that did close in 2017, they tended to be half the value compared those made a year earlier.

Avago still holds the record for the biggest-ever acquisition in the sector after purchasing Broadcom for $37 billion in 2016, and then adopting the company's name.

But Qualcomm is expected to surpass this when it completes its acquisition of NXP Semiconductors for $44 billion - ongoing Chinese antitrust investigation into the purchase notwithstanding.

Growth in the Internet of Things sector is starting to have a "significant impact" on the whole semiconductor market, Gartner claimed. Semiconductors designed for wireless connectivity grew by 19.3 per cent to $10 billion in 2017.

"2017 saw two semiconductor industry milestones — revenue surpassed $400 billion, and Intel, the number one vendor for the last 25 years, was pushed into second place by Samsung Electronics," said Gartner research director George Brocklehurst.

"Both milestones happened due to rapid growth in the memory market as undersupply drove pricing for DRAM and NAND flash higher," he added.