Global semiconductor capital spending to decline 2% in 2016: Gartner

NEW DELHI: Capital spending by semiconductor companies is projected to fall 2 per cent at $62.8 billion worldwide this year as weak demand for PCs, tablets and mobile products continue to plague the industry, Gartner said today.

In 2015, the figure stood at $64.06 billion.

"Worldwide semiconductor capital spending is projected to decline 2 per cent in 2016, to $62.8 billion," Gartner said.

However, looking forward, the market is expected to return to growth in 2017, with capital spending of $65.52 billion.

"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," said David Christensen, senior research analyst at Gartner.

Christensen further said the slowdown in the devices market has driven semiconductor producers to be conservative with their capital spending plans.

"This year, leading semiconductor manufacturers are responding to anticipated weak demand from semiconductors and preparing for new growth in leading-edge technologies in 2017," he added.

Gartner said the aggressive pursuit of semiconductor manufacturing capability by the Chinese government is an issue that cannot be ignored by the semiconductor manufacturing industry.

"Last year, there has been consolidation and merger and acquisition (M&A) activity with specific offers from various China-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," it added.