Market research firm Gartner predicts that following Brexit, semiconductor inventory levels could increase in the third and fourth quarters, which may result in reduced production volumes.
For the second time this year, Gartner said it expects semiconductor capital spending to decline less than earlier forecast in 2016, even as the industry fights with excess inventory, global economic insatiability and weak demand for PC’s, tablets, and mobile products, causing slow growth for the semiconductor industry.
The research firm now expects semiconductor industry capital spending to drop 0.7% to $64.3bn this year.
Back in May, Gartner expected capital spending to be down 2% this year after estimating in January that it would decline by 5% in 2016.
The PC, ultramobile (tablet) and smartphone production forecast for the second half of 2016 has been lowered from 2015, as the industry slowdown continues.
These reductions have resulted in a forecasted 3% decline for the semiconductor market.
Memory revenue growth for 2016 is also revised downward compared with the previous forecast, due to a weaker pricing outlook.
Gartner senior research analyst David Christensen said: "While currency exchange rates are another reason for the ongoing revenue decrease, the aggressive pursuit of semiconductor manufacturing capability by the Chinese government and related investment companies is becoming a major factor.
"This will dramatically affect the competitive landscape of the global semiconductor manufacturing in the next few years as China becomes a major market for semiconductor usage and manufacturing."
