STAMFORD, CT – Gartner this week raised its worldwide semiconductor capital spending projection for 2016, but warned of possible lower production longer-term.

The research firm now expects spending to decline 0.7% in 2016 to $64.3 billion. That's up from the estimated 2% 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,” said David Christensen, senior research analyst at Gartner. “This slowdown in electronic product demand has driven semiconductor device manufacturers to be conservative in increasing production. 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."

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% 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 Christensen. "This will dramatically affect the competitive landscape of global semiconductor manufacturing in the next few years, as China becomes a major market for semiconductor usage and manufacturing."

 
Register now for PCB West, the Silicon Valley's largest trade show for the printed circuit industry, taking place Sept. 13-15 in Santa Clara: pcbwest.com

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