Worldwide semiconductor revenue is forecast to total $US337.8 billion in 2015, a decline of 0.8 per cent from 2014.
According to Gartner, this is first decline in revenue since 2012 when the market declined 2.6 per cent - this forecast is down from the previous quarter's forecast of 2.2 per cent growth.
“Once again the outlook for the major applications that drive the semiconductor market, including PCs, smartphones and tablets, has been revised downward,” says Andrew Norwood, research vice president, Gartner.
“This, combined with the continuing impact of the strong dollar on demand in key markets outside of the US, has resulted in a decline in our forecast and a negative growth rate for 2015.”
Not only did the year start badly, Norwood says the industry is not seeing the typical ramp up in sales of semiconductors in many areas of the market in anticipation of the holiday season.
“As a result, sales are not going to recover enough in the second half to halt an annual decline in semiconductor revenue for 2015,” he adds.
Norwood believes this will be the first time worldwide semiconductor sales have contracted since 2012.
Global economic headwinds, such as the slowing Chinese economy and the strong dollar, are pushing up the cost of electronic equipment in regions including Western Europe and Japan.
This is leading to a reduction in outright sales and also encouraging buyers to shift to lower-cost equipment in these markets.
Gartner predicts a more positive outlook for 2016 and is forecasting semiconductor revenue will increase 1.9 per cent to $US344.1 billion.
However, Gartner forecasts an oversupply in DRAM in 2016.
“While 2015 has already seen an oversupply in the PC segment of the DRAM market, we believe that 2016 will see a more widespread oversupply that will also impact the server and low-power sectors of the DRAM market,” Norwood adds.
“DRAM revenue is forecast to decline 12.2 per cent in 2016 due to oversupply and resulting weak pricing.”