Worldwide Semiconductor Capital Spending to Decrease by 1% in 2015: Gartner

Gartner says reductions in memory spending will result in 3.3% decline in spending in 2016

Worldwide semiconductor capital spending is projected to decline 1% in 2015, to $63.9 billion, according to Gartner, Inc. This is a down from the 2.5% growth predicted in Gartner's previous quarter's forecast. The forecast for 2016 is unchanged at a 3.3% decline over 2015 (see Table 1).

"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. "Next year we are anticipating DRAM manufacturers to respond to oversupply conditions with dramatic deductions in their investment plans."

Table 1: Worldwide Semiconductor Capital Spending and Equipment Spending Forecast, 2014-2019 ($ millions) 2014 2015 2016 2017 2018 2019Semiconductor Capital Spending ($M) 64569.5 63909.0 61772.0 65154.9 69449.1 72999.4Growth (%) 11.6 -1.0 -3.3 5.5 6.6 5.1Wafer-Level Manufacturing Equipment ($M) 33684.1 33609.0 32804.7 35909.0 39018.6 40895.7Growth (%) 16.2 -0.2 -2.4 9.5 8.7 4.8Wafer Fab Equipment ($M) 31953.0 31798.7 31017.0 33880.9 36615.4 38402.5Growth (%) 16.3 -0.5 -2.5 9.2 8.1 4.9Wafer-Level Packaging and Assembly Equipment ($M) 1731.1 1810.3 1787.7 2028.1 2403.2 2493.1Growth (%) 14.3 4.6 -1.3 13.4 18.5 3.7Source: Gartner (October 2015)

Capital investment policies of leading semiconductor vendors have maintained a cautious attitude against the background of sluggish electronics demand. Intel has announced further capital spending cutbacks since Gartner's previous forecast update, as have outsourcing companies (foundry and semiconductor assembly and test services [SATS]) and integrated device manufacturers (IDM).

Capital spending in memory will decrease by $0.8 billion compared with Gartner's second-quarter forecast. The spending forecast in the DRAM sector has a strong downward adjustment to only 0.2% growth for 2015 from 29% in the last forecast, as PC and ultramobile demand slows more significantly.

"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," said Mr. Ogawa. "As a result, we anticipate that DRAM manufactures will move more quickly from investing in new capacity to a maintenance and upgrade existing capacity mode of operation."

In the NAND sector, the latest forecast upgrades growth for spending to 0.1% in this year from negative 19.4% in the previous forecast. Gartner predicts that memory manufacturers will switch 10% of capacity investments from DRAM to NAND in late 2015 and 2016. DRAM manufacturers will respond to weak market conditions by slowing investments in late 2015 and early 2016.

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