Worldwide semiconductor sales to decline 0.8% in 2015; first revenue decline since 2012

NEW DELHI: The chips are down, literally. Weakness in global computer and smartphone market will result in semiconductor market shrinking by 0.8% according to research firm Gartner.

Global worldwide semiconductor revenue is forecast to total $337.8 billion in 2015, a decline of 0.8% from 2014. This is first decline in revenue since 2012 when the market declined 2.6%. This forecast is down from the previous quarter's forecast of 2.2% growth.

"Once again the outlook for the major applications that drive the semiconductor market, including PCs, smartphones and tablets, has been revised downward," said Andrew Norwood, research vice president at Gartner, in a statement. This, combined with the continuing impact of the strong dollar on demand in key markets outside of the US, has resulted in a decline in our forecast and a negative growth rate for 2015.

"Not only did the year start badly, but we are not seeing the typical ramp up in sales of semiconductors in many areas of the market in anticipation of the holiday season," Norwood added. As a result, sales are not going to recover enough in the second half to halt an annual decline in semiconductor revenue for 2015.

This will be the first time worldwide semiconductor sales have contracted since 2012. Global economic headwinds, such as the slowing Chinese economy and the strong dollar, are pushing up the cost of electronic equipment in regions including Western Europe and Japan. This is leading to a reduction in outright sales and also encouraging buyers to shift to lower-cost equipment in these markets.