© roza Analysis | February 23, 2016

Semiconductor capital spending rebound fails to materialize in 2015

According to IC Insights, total worldwide semiconductor industry capital spending is forecast to show low single-digit growth in 2016 after registering a 1% decline in 2015.
As discussed below, last year’s drop in semiconductor industry capital spending was a significant departure from historical patterns that go back more than 30 years.

The graph below shows the annual worldwide semiconductor industry capital spending changes from 1983-2015. Over the past 33 years, there have been six periods when semiconductor industry capital spending declined by double-digits rates for one or two years (1985-1986, 1992, 1997-1998, 2001-2002, 2008-2009, and 2012-2013).

It is interesting to note that in every case except the 2012-2013 spending downturn, within two years after the period of decline in capital spending, a surge in spending of at least 45% occurred. The second year increases in spending after the cutbacks were typically stronger than the first year after a downturn with the lone exception to this being the 2010 spending rebound after the 2008-2009 downturn. This was because most semiconductor producers tend to act very conservatively coming out of a market slowdown and wait until they have logged about 4-6 quarters of good operating results before significantly increasing their capital spending again.

The streak of strong capital spending growth within two years after a spending cutback timeperiod ended in 2015, with capital spending registering a 1% decline. IC Insights believes that this is yet another indication of a maturing semiconductor industry.


© IC insights


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