Semiconductor capital spending to decline in 2016

Worldwide semiconductor capital spending is projected to decline 0.7 per cent in 2016 to $64.3 billion, market research firm Gartner said on Monday.

The figure, however, 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 has driven semiconductor device manufacturers to be conservative in increasing production,” said David Christensen, senior research analyst, at Gartner.

“Looking ahead, it appears 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,” he added.

In its analysis on the outlook for the semiconductor market, Gartner lowered the PC, ultramobile (tablet) and smartphone production forecast for the second half of 2016 compared to 2015.

Memory revenue growth for 2016 has also been revised downward compared with the previous forecast due to a weaker pricing outlook.

“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,” Christensen added.