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IDC forecasts 2016 will be a 'down year' for the semiconductor market

11 May 2016

The worldwide semiconductor market is continuing to decline this year, and shows no signs of turning around.

According to IDC, in 2016 semiconductor revenue will fall for a second consecutive year to $324 billion, down 2.3% from the previous year. IDC also forecasts that semiconductor revenues will log a compound annual growth rate (CAGR) of 1.9% from 2015-2020, reaching $364 billion in 2020.

IDC finds various reasons for the decline, citing an ‘economic pause’ in emerging markets, and the fact that LTE mobile phones will grow moderately by 8% this year compared to 52.5% in 2015.

According to IDC, the automotive market and select portions of the consumer market will continue to remain bright spots in an otherwise down year for this industry.

However, 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% and 10%, respectively.

Excluding memory from the forecast, the semiconductor market would grow 1.7% this year, IDC says.

"Company transformation continues to be a reoccurring theme across our industry as suppliers overhaul leadership, retool technology, search for new customers, and double down on their core business for stability," says Mario Morales, IDC programme vice president of enabling technologies.

"It will be a couple of years before we realise which game plan succeeds, but even the leaders are struggling to keep pace with the cadence of the market,” he says.

"Automotive semiconductor revenue is concentrated with the top 10 suppliers, accounting for 64% of the industry's revenue and is likely to grow more concentrated as announced mergers are closed," says Nina Turner, IDC research manager for enabling technologies and semiconductors.

"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% through 2020," Turner says.

Michael J. Palma, research director, added, "The consumer semiconductor market fell by 11% to $46.1 billion in 2015 on weak system demand and pricing pressure in the core tablet and digital TV (DTV) markets, while semiconductor revenues grew for smart home, wearables, set-top boxes (STBs), and gaming consoles.

"Through the 2020 forecast period, the market is expected to grow at a compound rate of 6% as consumer Internet of Things (IoT) applications should outpace market growth and DTVs benefit from the emerging 4K upgrade cycle."

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.
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