Market research firm Gartner predicts that spending by semiconductor companies will fall 2% this year as weak demand for PCs, tablets and mobile products continue to plague the industry.
Gartner’s forecast total of $62.8bn for 2016, however, represents an increase from an estimated 4.7% decline in its previous quarterly forecast.
Last year, the figure stood at $64.06bn. However, going forward, Gartner expects a return to growth in 2017, forecasting spending of $65.53bn, growth of 4.4%, and further growth in 2018, with $70.01bn, an increase of 6.8%.
Increased demand for 10 nanometer and 3D NAND process development in memory and logic/foundry will drive overall spending in 2017.
Gartner senior research analyst David Christensen said: "The slowdown in the devices market has driven semiconductor producers to be conservative with their capital spending plans.
"This year, leading semiconductor manufacturers are responding to anticipated weak demand from semiconductors and preparing for new growth in leading-edge technologies in 2017."
Gartner added that the semiconductor manufacturing industry should not ignore the Chinese government’s aggressive pursuit of chip making capability amid several developments in the market over the last year.
The company expects the move by China-based entities to dramatically affect the chip making landscape in the next few years.
Earlier this year, Gartner reported that worldwide semiconductor revenue dropped 1.9% to $333.7bn in 2015, from $340.3bn in 2014.
The combined revenue of top 25 semiconductor vendors increased 0.2%, which was more than the overall industry’s growth.
They accounted for 73.2% of total market revenue, up from 71.7% in 2014.
Intel saw its revenue decline to $51.7bn in 2015, a 1.2% drop, due to falling PC shipments. The company finished the year with 15.5% share of the semiconductor market.
Samsung stood at second place with 11.6% market share, followed by SK Hynix, Qualcomm and Micron Technology.