Worldwide semiconductor capital spending is projected to decline 4.7% in 2016 to $59.4 billion, according to Gartner. This is down from the 3.3% growth predicted in Gartner’s previous quarter’s forecast.

“The 2016 outlook for the semiconductor manufacturing equipment market reflects a bleaker outlook for end-user electronics demand and the world economic environment,” said David Christensen, senior research analyst at Gartner. “Capital investment policies of leading semiconductor vendors have remained cautious against the background of sluggish electronics demand. However, the long-term outlook shows a return to growth, although the wafer-level manufacturing equipment market is expected to enter a gentle down cycle in 2016 due to the loss of the supply and demand balance in the DRAM market.”

In 2016 spending on wafer-level manufacturing equipment is forecast to decline 2.4%. Within the forecast, different segments are expected to fare differently in response to varying end-market conditions. For example, the lithography segment will grow 1.4%, while the etch, clean and planarization equipment markets in 2016 are expected to decline by 2.9%.

The deposition equipment segment will improve slightly in 2016 with negative 3.2% growth. Beyond 2016, the market turns positive, with relatively strong growth forecast through 2018.

This research is produced by Gartner’s Semiconductor Manufacturing program. This research program, which is part of the overall semiconductor research group, provides a comprehensive view of the entire semiconductor industry, from manufacturing to device and application market trends.