Worldwide Semiconductor Capital Spending to Decline 2% in 2016: Gartner

Worldwide semiconductor capital spending is projected to decline 2% in 2016, to $62.8 bn, according to Gartner. This is up from the estimated 4.7% decline in Gartner’s previous quarterly forecast. “While the first quarter 2016 forecast has improved from a projected decline of 4.7% in the previous quarter’s forecast, the 2% decline in the market for 2016 is still bleak,” said David Christensen, senior research analyst at Gartner. “Excess inventory and weak demand for PCs, tablets, and mobile products continue to plague the semiconductor industry, resulting in a slow growth rate that began in late 2015 and is continuing into 2016.”

“The slowdown in the devices market has driven semiconductor producers to be conservative with their capital spending plans,” said Christensen. “This year, leading semiconductor manufacturers are responding to anticipated weak demand from semiconductors and preparing for new growth in leading-edge technologies in 2017.”

In addition, the aggressive pursuit of semiconductor manufacturing capability by the Chinese government is an issue that cannot be ignored by the semiconductor manufacturing industry. In the last year, there has been consolidation and merger and acquisition (M&A) activity with specific offers from various Chinese-based entities, indicating the aggressiveness of the Chinese. This will dramatically affect the competitive landscape of global semiconductor manufacturing in the next few years, as China is now a major market for semiconductor usage and manufacturing.