Global semiconductor capital spending is forecast to drop by one percent in 2015, to $63.9 billion, according to Gartner, Inc. The market researcher downgrades its previous forecast of 2.5 percent growth due to continued weakness in end user demand.
Gartner maintains its forecast of a 3.3 percent decline for 2016, primarily due to an oversupply in the DRAM market, causing semiconductor makers as well as foundry and semiconductor assembly and test services and IDMs to cut their investment plans. The DRAM market also faces lower demand for several product segments, including notebook computers, smart phones, and servers, which have led to margin erosion for DRAM suppliers, according to DRAMeXchange.
"We are continuing to see weakness in end-user electronics demand in response to an uncertain economic environment, which is putting a damper on 2015 spending," said Takashi Ogawa, research vice president at Gartner, in a statement. "Next year we are anticipating DRAM manufacturers to respond to oversupply conditions with dramatic deductions in their investment plans."
Gartner expects capital spending in memory to decrease by $0.8 billion compared with its second quarter forecast. The spending forecast in the DRAM sector has been adjusted to only 0.2 percent growth for 2015 from 29 percent in the last forecast, as PC and ultramobile demand slows more significantly. This means DRAM manufacturers will slow investments in late 2015 and early 2016, Gartner said.
"In the DRAM market, weak end-market conditions combined with new foundries coming on line at Samsung and SK Hynix have created a weaker market than anticipated in our last forecast," added Ogawa. "As a result, we anticipate that DRAM manufacturers will move more quickly from investing in new capacity to a maintenance and upgrade existing capacity mode of operation."
The Gartner report, Forecast Analysis: Semiconductor Capital Spending and Manufacturing Equipment, Worldwide, 3Q15, also indicates that memory manufacturers will switch 10 percent of capacity investments from DRAM to NAND in late 2015 and 2016. Gartner’s latest forecast upgrades NAND growth for spending to 0.1 percent in 2015 from negative 19.4 percent in the previous forecast.