STAMFORD, CT – Gartner this week lowered its forecast for worldwide semiconductor capital spending, citing continued weakness in end-user demand.

The research firm now projects the market to decline 1% in 2015 to $63.9 billion, down from the 2.5% growth predicted in Gartner's second quarter forecast.

The firm left its 2016 forecast unchanged at a 3.3% decline year-over-year.

"We are continuing to see weakness in end-user electronics demand in response to an uncertain economic environment, which is putting a damper on 2015 spending," said Takashi Ogawa, research vice president at Gartner. "Next year we are anticipating DRAM manufacturers to respond to oversupply conditions with dramatic deductions in their investment plans."

Capital investment policies of leading semiconductor vendors have maintained a cautious attitude against the background of sluggish electronics demand, says Gartner. Intel has announced further capital spending cutbacks, as have outsourcing companies (foundry and semiconductor assembly and test services and integrated device manufacturers).

Capital spending in memory will decrease $0.8 billion compared with Gartner's second-quarter forecast. The spending forecast in the DRAM sector has a downward adjustment to 0.2% growth for 2015 from 29% in the last forecast, as PC and ultramobile demand slows more significantly.

"In the DRAM market, weak end-market conditions, combined with new foundries coming on line at Samsung and SK Hynix, have created a weaker market than anticipated in our last forecast," said Ogawa. "As a result, we anticipate DRAM manufacturers will move more quickly from investing in new capacity to a maintenance and upgrade existing capacity mode of operation."

In the NAND sector, the latest forecast upgrades growth for spending to 0.1% this year; Gartner previously predicted a drop of 19.4%. Gartner predicts memory manufacturers will switch 10% of capacity investments from DRAM to NAND in late 2015 and 2016. DRAM manufacturers will respond to weak market conditions by slowing investments in late 2015 and early 2016.

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