HONG KONG, SAR, PRC, DECEMBER 22, 2009—The year ahead holds greater promise for the semiconductor industry, according to KPMG’s fifth global semiconductor study “The road to recovery in the global semiconductor industry.”
The past few months have been tough but 2010 will deliver greater revenues as semiconductor executives eye the huge market opportunities in the Asian region. The respondents expect some increase in profitability and trailing job growth in the coming months.
Asia is expected to give a major boost to this industry. In particular, China will transform from a key manufacturing centre to the most important end market for semiconductors in the next three year period, said the KPMG report.
Asia and China’s role
KPMG’s findings indicated a new found confidence among top executives surveyed for the study, a confidence which had been lacking in the past year. This enthusiasm is in line with the semiconductor industry association’s recent forecast, said David Leaver, audit partner at KPMG in Singapore.
Another survey conducted by KPMG in September also showed a positive outlook in the tech industry. Leaver noted that Asia is still seen by many as the most important region for recovery and revenue growth in the next three years for the semiconductor industry.
It is not surprising that executives are a bit cautious about the upswing because not all key metrics are moving ahead uniformly.
“While there are positive signs for the industry, these are offset by the views that profitability, research and development, capital expenditure and employment are expected to grow less quickly than revenue, reflecting some lingering skepticism by semiconductor industry leadership,” said Leaver.
The expanding Chinese economy has given hope to semiconductor executives and the majority of the respondents see this nation as the most important market for revenue growth in three years. The US and Taiwan were voted as the second and third most important markets, respectively.
Energy efficient products
About 76 per cent of the respondents expect an increase of greater than five per cent while 38 per cent hope profits to jump by more than 10 per cent over the next 12 to 18 months. The mood is upbeat about the job market also with two-thirds of the semiconductor executives expecting their company’s global workforce to grow one per cent or more in the next 12 months.
A significant number of executives are expecting increase in investment in both research and development, and capital during the next year. The whole world is becoming more conscious about the environment and the executives in the semiconductor industry also showed a strong interest in energy efficient or energy renewable technology.
About 66 per cent of the respondents indicated a high or extremely high level of customer interest in green products. Out of those surveyed, 45 per cent expect energy efficient products to drive more than half of the revenue from their current product line in five years. This definitely gives hope for a more sustainable environment in the future.
