Semiconductor industry executives are planning for an industry rebound in 2013, most likely weighted to the second half of the year. Looking beyond the recovery, the US has moved ahead of China as the most important market for revenue, according to this year's global semiconductor industry survey from KPMG International.
A year ago, semiconductor executives surveyed by KPMG anticipated lower growth and showed less confidence in 2011. Today, as the industry finds itself in the predicted economic malaise to close out this year, three-quarters of the semiconductor executives say their company’s revenue growth will increase in the next fiscal year, compared to 63 percent a year ago. Also, two-thirds expect their workforce to expand, up from just 48 percent in last year’s survey. In addition, 71 percent say annual industry profitability will increase over the next year.
“Our survey findings bolster the belief that we will see the rebound beginning in 2013, with a gradual recovery picking up steam in the back half of next year,” says Gary Matuszak, global chair of KPMG’s Technology, Media and Telecommunications practice. “And unlike past recoveries, this one will not be driven by wireless handsets and wireless communications alone, as other applications are becoming increasingly important revenue drivers, such as power management given the proliferation of wireless devices.”
The broadening set of significant semiconductor applications could be responsible for the shift in the importance of geographic markets, placing the US ahead of China. For the third year in a row, fewer industry executives believe China will be the most important market for their company’s semiconductor revenue growth 3 years from today while the US market’s importance has increased. The US and Chinese markets are followed in importance by Europe, Korea, and Taiwan, which only 2 years ago was ranked second, slightly ahead of the US.
“The decline in Korea and Taiwan may be explained by their high exposure to the Japanese and China economies which are both in poorer condition than 2011,” says Matuszak.
In a trend similar to the shift in geographic market importance, compared to a year ago, significantly fewer executives placed China among the top three markets for headcount growth during the next 12 months, while more placed the US and Europe among the top. Still, China remains first, followed by the US and Europe.
In the expanding semiconductor applications market, consumer applications have supplanted wireless on top of the list of the most important semiconductor revenue drivers over the next fiscal year, with computing still among the top three. In addition, more executives than in the prior three surveys ranked industrial, medical, automotive applications and power management as important revenue drivers.
“Semiconductors have become an enabling technology in many areas beyond traditional wireless and computing applications, such as mobile commerce and new features in automobiles,” says Ron Steger, global chair of KPMG’s Semiconductor practice. He adds that, “we were not surprised at the increasing emphasis on power management, as the proliferation of wireless devices is making this the most important performance feature today.” This year, 53 percent of the executives stated renewal energy, such as battery technologies, will be an important driver of revenue over the next 3 years, up from 36 percent a year ago.
Additional key findings from the semiconductor survey:
- Two-thirds, compared to 62 percent last year, anticipate an increase in the number of merger and acquisition deals in the industry in fiscal year 2013.
- More than three-fourths expect semiconductor-related R&D spending to increase in the next fiscal year, up significantly from 2011 (65 percent).
- NFC (32 percent) and RFID (28 percent) were cited most often as the technologies expected to provide the best platforms for conducting mobile payments.
- Of several auto-related areas, one-quarter say body electronics (remote control, HVAC, etc.) will provide the most semiconductor revenue over the next 3 years, while 20 percent say communications convergence (transition smartphone to the car, etc.) and roughly the same number say safety (lane departure warning, electronic stability control, etc.)
KPMG Global Semiconductor Survey
KPMG’s study, conducted in September, surveyed 152 semiconductor industry business leaders, primarily senior level executives, including device, foundry and fabless manufacturers. Half of the companies represented in the survey have annual revenue of $1 billion or more.
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