Economic instability results in semiconductor spending decline; Gartner

Weak demand for PC's, tablets and mobile products in the past three years have slowed semiconductor growth

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Economic instability results in semiconductor spending decline; Gartner The slowdown in electronic product demand has driven semiconductor device manufacturers to be conservative in increasing production.
By  Aasha Bodhani Published  July 28, 2016

Research house Gartner has projected that worldwide semiconductor capital spending will decline to 0.7% in 2016, to $64.3bn. This is up from the estimated 2% decline in Gartner's previous quarterly forecast.

David Christensen, senior research analyst at Gartner, said: "Economic instability, inventory excess, weak demand for PC's, 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.

"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.

Christensen added: "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.

"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."

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