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October 12, 2015

Chinese economy & US dollar prices cause semiconductor slump

News: Rising electronic equipment costs cause sales decline for first time in three years.

By CBR Staff Writer

Global revenue for semiconductors this year will drop to $337.8bn, marking a 0.8% decline from the previous year.

The decline is in contrast to the previous quarter’s forecast of a 2.2% growth, and is the first revenue decline after 2012 when a 2.6% decline was recorded, according to a Gartner report.

Gartner research vice president Andrew Norwood said: "Once again the outlook for the major applications that drive the semiconductor market, including PCs, smartphones and tablets, has been revised downward.

"This, combined with the continuing impact of the strong dollar on demand in key markets outside of the U.S., has resulted in a decline in our forecast and a negative growth rate for 2015."

"Not only did the year start badly, but we are not seeing the typical ramp up in sales of semiconductors in many areas of the market in anticipation of the holiday season."

Sales for the semi-conductors are thus unlikely to be revived in the second half of the year, which could have forestalled the annual decline this year, he added.

The weak Chinese economy and rising US dollar prices, among other factors, have been affecting the market for semi-conductors.

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Rising costs of electronic equipment in regions including Western Europe and Japan is another reason cited for the decline, since customers are opting for lower-cost equipment instead.

The firm, however, expects the next year to be better for the semi-conductor industry.

Norwood sai: "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.

"DRAM revenue is forecast to decline 12.2% in 2016 due to oversupply and resulting weak pricing."

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