Semiconductor sales are in a two-year slump due to weak demand for PCs and smartphones, according to a new forecast. The Internet of Things and China are generating excitement, but are not expected even in the medium term to provide a significant boost.

Chips sales will be rise a mere 2.2% this year and be nearly flat at 1.3% growth next year, market watcher Gartner said at the opening of the annual Semicon West event here. Chip growth will return to a more typical 4-5% from 2017-2019, Gartner predict based on modest pickup in mainly traditional markets.

Overall PC sales will decline 8.7% this year. Its sweet spot, notebooks and ultramobiles, will fall 1.9%, down from its previous forecast of 6.2% growth, Gartner now predicts.

L“Any hitch with the rollouts of Microsoft Windows 10 and Intel’s next-generation CPU Skylake this fall could lower our estimates further,” said Bob Johnson, a Gartner analyst.

Even cellphones are slumping with growth of just 0.7% predicted, down from 3%. “We are seeing end user demand problems that tend to pull down semiconductor revenues,” said Johnson.

In memory, DRAMs will be in oversupply in the second half of this year as new Samsung and Hynix fabs come online. The good news is NAND flash will grow at an 8.1% compound rate through 2019, largely due to the rise of solid-state drives.

Samsung’s 3-D NAND is still shipping only in its merchant SSDs, Johnson said, suggesting their yields were still low and costs high. Micron/Intel and SK Hynix will start shipping 3-D NAND by the end of the year with Toshiba/SanDisk following, he said.

“By 2018 we think almost half the flash bits shipped will be 3-D NAND, and that will jump up dramatically in 2019,” Johnson said. “My gut feeling is a lot of it will be conversions of existing fabs,” he added.

The slow silicon growth will dampen spending on capital equipment. Gartner predicts capex gear sales growth of just 2.5% this year, down from 4.1% predicted three months ago. Capex gear sales will decline 3.3% next year, Johnson said.

By: DocMemory
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