Depending on the market research firm, global semiconductor capital spending will either grow or decline in the single digits in 2016. The good news is that spending should rebound after 2016.
While IC Insights forecasts low-digit growth in 2016 for global semiconductor capital spending, Gartner expects spending to drop by 4.7 percent in 2016, to $59.4 billion. This is down from Gartner’s previous quarter’s forecast of 3.3 percent growth for 2016.
This is coupled with dismal spending for semiconductor equipment last year. Capital spending in the semiconductor industry dropped one percent in 2015, according to IC Insights. “Last year’s drop in semiconductor industry capital spending was a significant departure from historical patterns that go back more than 30 years,” signaling a mature semiconductor industry, according to the IC Insights’ The McLean Report.
“Over the past 33 years, there have been six periods when semiconductor industry capital spending declined by double-digits rates for one or two years (1985-1986, 1992, 1997-1998, 2001-2002, 2008-2009, and 2012-2013),” said IC Insights. “It is interesting to note that in every case except the 2012-2013 spending downturn, within two years after the period of decline in capital spending, a surge in spending of at least 45 percent occurred.”
"The 2016 outlook for the semiconductor manufacturing equipment market reflects a bleaker outlook for end-user electronics demand and the world economic environment," said David Christensen, senior research analyst at Gartner, in a statement.
"Capital investment policies of leading semiconductor vendors have remained cautious against the background of sluggish electronics demand. However, the long-term outlook shows a return to growth, although the wafer-level manufacturing equipment market is expected to enter a gentle down cycle in 2016 due to the loss of the supply and demand balance in the DRAM market,” he continued.
Gartner’s report, "Forecast Analysis: Semiconductor Capital Spending and Manufacturing Equipment, Worldwide, 4Q15," also forecasts that spending on wafer-level manufacturing equipment will decline 2.4 percent in 2016. However, different segments within the forecast will vary. One example cited is the lithography segment, which is expected to grow 1.4 percent, while the etch, clean and planarization equipment markets are expected to decline by 2.9 percent. Gartner also expects the deposition equipment segment to improve slightly in 2016 with negative 3.2 percent growth.
The good news is that Gartner expects “relatively strong growth forecast through 2018” beyond 2016.