Worldwide semiconductor revenue is forecast to total $332 billion in 2016, a decrease of 0.9 percent from 2015, according to Gartner, Inc. This represents two consecutive years of revenue decline, which has happened only once in history. But the outlook for the semiconductor market is improving.

"The worst appears to be over, with a stronger outlook for the remainder of 2016 driven by inventory replenishment and increasing average selling prices (ASPs) in select markets," said Jon Erensen, research director at Gartner. "Improving conditions in the commodity memory market contributed the most to the improved outlook based on stronger supply-and-demand dynamics.

"After an inventory correction started the year off slowly, the ramp up to the iPhone 7 launch and the build for the upcoming holiday season has spurred on the market in the second half of 2016. However, in many cases the inventory correction was too steep, and the industry is experiencing shortages and is scrambling to increase supply," added Mr. Erensen.

Key electronic equipment markets have bottomed and stabilized, which has contributed to the stronger outlook, and in some markets, most notably smartphones and video game consoles, production estimates have been revised up for 2016. The outlook for emerging opportunities for semiconductors in the Internet of Things (IoT) and wearable electronics remains choppy with these markets still in the early stages of development and too small to have a significant impact on overall semiconductor revenue growth in 2016 and 2017.

Additional analysis on the outlook for the semiconductor market can be found in the Gartner Webinar "Semiconductor Forecast, 3Q16 Update." Gartner clients can view the full forecast in "Semiconductor Forecast Database, Worldwide, 3Q16 Update."

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Rob van der Meulen
Gartner
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