According to Gartner, worldwide semiconductor capital spending is projected to grow by 2.5% in 2015, a noticeable decline from the 4.1% growth predicted in the Q1/15 forecast.

One of the primary causes of the drop in the projection, which will result in a 3.3% decline in 2016, is the deterioration of the euro and yen, as most semiconductor equipment is produced in either Europe or Japan.

“Since the previous quarter’s forecast, continued weakness in the euro and yen have created major weaknesses in the overall equipment market picture,” said Bob Johnson, research vice president at Gartner. “With over half of all equipment being produced by either Japanese or European suppliers, the weakness in their currencies has been the primary factor in our reducing our overall outlook for 2015. Longer term, we expect modest growth throughout the semiconductor cycle, with just a pause in the equipment market growth expected in 2016, as DRAM goes through a typical cyclical downturn.”

Overall capital spending projections also fell from the Q1/15 forecast, dropping from 10.2% to 3.2%.

Access the full Gartner report here.