Chipmakers Are Tightening Their Belts in 2016

After a small dip in sales during 2015, semiconductor companies are cutting back on capital spending this year.

Semiconductor manufacturers are trimming their investments in 2016, according to a revised forecast released today by technology research firm Gartner.

Capital spending is expected to drop 4.7 percent this year to $59.4 billion as the world's chipmakers navigate an uncertain economic climate, at least in the near-term. Gartner had previously predicted that semiconductor capital spending would increase by 3.3 percent in 2016.

David Christensen, senior research analyst at Gartner, said the company's revised "outlook for the semiconductor manufacturing equipment market reflects a bleaker outlook for end-user electronics demand and the world economic environment," in a statement. "Capital investment policies of leading semiconductor vendors have remained cautious against the background of sluggish electronics demand."

The pullback will be short-lived, assured Christensen.

He noted that "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." The market will rebound in 2017 and 2018, when spending is expected to reach $63.6 billion and $69.1 billion, respectively.

Last week, in its preliminary annual survey of the market, Gartner revealed that worldwide semiconductor revenue dropped to an estimated $333.7 billion, a 1.9 percent decline.

Intel, the world's leading PC and server processor manufacturer, saw its revenue fall to $51.7 billion in 2015, a 1.2 percent drop, due to falling PC shipments. The Santa Clara, Calif.-based company finished the year with 15.5 percent of the semiconductor market.

Qualcomm took the biggest hit last year, dropping 17.4 percent on revenue of 15.9 billion. By comparison, the mobile chipmaker hit $19.2 billion in sales during 2014. Micron Technology also suffered a significant drop (11.2 percent) on sales of $14.4 billion in 2015 compared to nearly $16.3 billion in 2014.

A strengthening U.S. dollar is partly to blame, according to Gartner research director Sergis Mushell. "The rise of the U.S. dollar against a number of different currencies significantly impacted the total semiconductor market in 2015. End equipment demand was weakened in regions where the local currency depreciated against the dollar," he said in a statement.

"Memory, the most volatile segment of the semiconductor industry, saw revenue decline by 0.6 percent, with DRAM experiencing negative growth and NAND flash experiencing growth," Mushell noted. Apple drove demand for application-specific integrated circuits (ASICs) up 2.4 percent.

The biggest gainers last year were Infineon Technologies and Samsung, notching 16.5 percent and 11.8 percent gains in revenue and sales of $6.6 billion and $38.9 billion, respectively. Texas Instruments' sales were flat at approximately $11.5 billion.

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.




Tags: Intel, semiconductors, chipmakers


0 Comments (click to add your comment)
Comment and Contribute

 


(Maximum characters: 1200). You have characters left.