According to Gartner, Worldwide semiconductor revenue is forecast to total $364.1 billion in 2017, an increase of 7.2 percent from 2016. It is a huge leap of 7.2% compared to 2016, and is said to be a surprise for the industry as the growth for 2016 was just 1.5%.

The semiconductor industry is rapidly becoming an innovation battleground. The contract manufacturing trend has pumped in millions of dollars into emerging and developing countries such as China, India, and Brazil while offering cost savings to electronics and technology companies. The growing aerospace and defense, healthcare and medical devices, telecommunications, and consumer electronics sectors are all embracing miniaturization, making it imperative for the semiconductor and electronics industry to respond actively.

However, compromising performance at the expense of cost is not an option in a highly competitive semiconductor and electronics industry. This has compelled companies to invest heavily in research and development. As the need for memory chips and processors to solve specific issues becomes pressing, larger companies are now turning their attention toward niche markets, leading to an uptick in the number of mergers and acquisitions in the semiconductor and electronics industry. The future of this industry will thus be dictated by changing computing and communications needs.

Key findings:

  1. Considering that the global economic outlook seems quite fragile, the current market scenario remains mixed for the coming few years.
  2. Semiconductor industry will see significant growth in the automotive and industrial markets.
  3. The production of the number of vehicles in Brazil, Russia, India and China will experience a promising increase, driving the automotive market followed by an increase in the average semiconductor content per vehicle.
  4. The growth of the industrial sector is fuelled by the expansion of high-speed rail transportation. Rise in the demand of energy in the industrial sector will also inevitably lead towards the need of renewable energy resources.
  5. Continued strong market positions by the data processing application market, driven by accelerating tablet sales, and the communications market by the sales of smartphones. Consumer electronics also benefit from a growth in units sold, particularly in digital set-top boxes.
  6. China will retain its dominant position with an increase in its market share of global semiconductor sales to almost half of the worldwide market.
  7. The global production capacity for semiconductors will increase to meet the global demand.
  8. Overall production capacity is sustaining progress toward smaller feature sizes and larger wafer diameters.
  9. Positive returns from the Operating profitability, except in the memory and back-end processes subsectors, which face strong competition and cycles of overcapacity.
  10. Working capital has been re-established to normal levels.

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Overall, the mixed growth seen in 2016 will turn into a broad and more consistent growth in 2017. Areas to watch for in 2017 are the industrial, automotive and storage markets, which are growing quickly but represent a smaller portion of the overall market. Additionally, the slow-growth outlook for traditional applications such as smartphones and PCs, highlights the importance of semiconductor.