The global semiconductor market is finally approaching rock bottom, according to IDC.
Global semiconductor revenue in 2016 will decline for the second consecutive year, to $324 billion, by 2.3 percent. An economic pause in China and emerging markets and a softening of the overall outlook this year in the U.S. are key factors that will affect global semiconductor demand, reports IDC.
Just about every vertical market for chips will remain soft this year with the exception of LTE mobile phones, which will grow by 8 percent. The consumer semiconductor market fell by 11 percent to $46.1 billion in 2015 on weak system demand and pricing pressure in the core tablet and digital TV (DTV) markets. The automotive market and select portions of the consumer market will be the only bright spots in an otherwise down year.
Ongoing weakness in consumer PC demand and oversupply will hamper memory prices for DRAM and NAND until the third quarter and result in revenues shrinking by 20 percent and 10 percent respectively. Excluding memory, the semiconductor market would grow 1.7 percent in 2016.
In the automotive semiconductor market wealth will not be distributed evenly. "Automotive semiconductor revenue is concentrated with the top 10 suppliers, accounting for 64 percent of the industry's revenue and is likely to grow more concentrated as announced mergers are closed," said Nina Turner, research manager for Enabling Technologies and Semiconductors at IDC, in a release. "As both government regulations and consumers demand more features, the key drivers of electrification, connectivity, and infotainment and advanced driver assistance (ADAS) features will continue to drive growth of semiconductor content on a per automobile basis and the automotive segment is expected to grow at four times the pace of the overall market with a CAGR of 8 percent through 2020."
"Company transformation continues to be a reoccurring theme across our industry as supplier’s overhaul leadership, retool technology, search for new customers, and double down on their core business for stability," added Mario Morales, program vice president, Enabling Technologies at IDC. "It will be a couple of years before we realize which game plan succeeds, but even the leaders are struggling to keep pace with the cadence of the market."
Other key findings from IDC's Semiconductor Application Forecaster include:
- Semiconductor revenue for the computing industry segment will decline 6.2% this year and will show a negative CAGR of -0.9% for the 2015-2020 forecast period. One bright spot for the computing segment is forecast to be high-end storage with year-over-year growth of 6.7% for the year.
- Semiconductor revenue for the mobile wireless communications segment will fall 4.4% year over year this year with a CAGR of 0% for 2015-2020. Semiconductor revenue for LTE mobile phones will experience an annual growth rate of 8% in 2016 and a CAGR of 6.3% for 2015-2020.
- The wired communications infrastructure segment is forecast to grow 1% in 2016 with strongest growth coming from security appliances.
- The consumer market is expected to grow through 2020 at a compound rate of 6 percent as consumer Internet of Things (IoT) applications should outpace market growth and DTVs benefit from the emerging 4K upgrade cycle.
Semiconductor revenues will log a compound annual growth rate (CAGR) of 1.9 percent from 2015-2020, reaching $364 billion in 2020, IDC concluded.