The worldwide semiconductor equipment market will be flat this year, but will rebound in 2017, according to the mid-year edition of the Semi Capital Equipment Forecast.

Analysts at Semi expect that the total semiconductor equipment market will grow 1% in 2016 (reaching $36.9 billion) after contracting 3% in 2015. An increase of 11 per cent is expected in 2017 for the market to reach $41.1 billion.

Equipment spending had a slow start in the beginning of the year and is expected to accelerate in the second half of the year. Spending growth will continue into 2017 driven by foundries, memory (both 3D NAND and DRAM), MPU, power, and investments in China.

Front-end wafer processing equipment is forecast to grow 2% in 2016 to total $29.3 billion, up from $28.8 billion in 2015, while the test equipment segment is expected to total $3.4 billion, essentially flat when compared to last year. Assembly and packaging equipment and other front end equipment are forecast to contract this year, falling to $2.4 billion (-5%) and $1.9 billion (-2%), respectively.

"After a tepid 2015, device manufacturers are beginning to ramp their investments in key industry segments,” said Denny McGuirk, president and CEO of SEMI. “We expect capital spending to improve for the remainder of 2016 and into 2017.”

Taiwan is forecast to continue as the world’s largest spender with $9.5 billion estimated for 2016 and $10.0 billion for 2017. In 2016, China is projected to be the second largest spender at $6.4 billion, followed by Korea at $6.2 billion. For 2017, Taiwan is projected to maintain its leading position while the market in Korea will nudge past the market in China.

In 2016, year-over-year increases are expected to be largest for rest of the world (59%), China (31%), and Europe (6%). Projected year-over-year percentage increases for 2017 are forecast to be largest for Korea (30% increase), Europe (19%), rest of world (18%) and China (13%).