Gartner Says Worldwide Semiconductor Capital Spending to Decline 0.7 Per Cent in 2016

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Worldwide semiconductor capital spending is projected to decline 0.7 per cent in 2016, to $64.3 billion, according to Gartner, Inc. (see Table 1). This is up from the estimated 2 per cent decline in Gartner's previous quarterly forecast.

"Economic instability, inventory excess, weak demand for PCs, tablets, and mobile products in the past three years has caused slow growth for the semiconductor industry. This slowdown in electronic product demand has driven semiconductor device manufacturers to be conservative in increasing production,” said David Christensen, senior research analyst at Gartner. “Looking ahead, it appears that the second half of 2016 may see improved demand. However, following Brexit, semiconductor inventory levels may rise in the third and fourth quarters, which could lead to reduced production volumes.”

The PC, ultramobile (tablet) and smartphone production forecast for the second half of 2016 has been lowered from 2015, as the industry slowdown continues. These reductions have resulted in a forecasted 3 per cent decline for the semiconductor market. Memory revenue growth for 2016 is also revised downward compared with the previous forecast, due to a weaker pricing outlook.

“While currency exchange rates are another reason for the ongoing revenue decrease, the aggressive pursuit of semiconductor manufacturing capability by the Chinese government and related investment companies is becoming a major factor,” said Mr Christensen. “This will dramatically affect the competitive landscape of the global semiconductor manufacturing in the next few years as China becomes a major market for semiconductor usage and manufacturing.”

This research is produced by Gartner's Semiconductor Manufacturing programme. This research programme, which is part of the overall semiconductor research group, provides a comprehensive view of the entire semiconductor industry, from manufacturing to device and application market trends. Additional analysis on the outlook for the market can be found at "Forecast: Semiconductor Capital Spending, Worldwide, 2Q16 Update."
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