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Chip execs brace for gloomy '09

Posted: 22 Dec 2008 ?? ?Print Version ?Bookmark and Share

Keywords:IC market forecast? chip executive survey? industry semiconductor?

A recent global survey of semiconductor company executives conducted by KPMG LLP, found that executives anticipate a steep decline in profitability over the next 12 to 18 months.

Most executives see R&D and capital expenditure investment decreasing significantly next year as well significant workforce contraction, according to the survey.

The consulting firm said its global survey, conducted in collaboration with the Semiconductor Industry Association in October and November, surveyed 85 senior level executives at semiconductor companies, including IDMs, foundries and fabless companies.

Growth projections are much more pessimistic this year compared to last year and continued to regress during the response solicitation period, as market and industry conditions continue to deteriorate at an accelerating rate, according to KPMG.

Fifty-two percent of those surveyed in November said they expect revenue to decline, including 39 percent who see a decline of greater than six percent, KPMG said. Sixty percent of executives who responded in October projected revenues to increase, the firm said.

"Executives are clearly telling us that the negative industry trends we began to see in September are expected to deteriorate further, and these companies will need to become more efficient in managing costsespecially with tight credit markets," said Gary Matuszak, leader of KPMG's global information, communications and entertainment practice, in a statement.

Last year, 99 percent of executives who responded said they expected revenue to grow in 2008, with 52 percent estimated growth of more than 10 percent.

This year's study found that executives are also expecting negative profitability trends. When asked to project profitability over the next 12 to 18 months, 61 percent surveyed in October said profits would decline, including 20 percent who project a decrease of more than 10 percent, while 69 percent of November, respondents see a decline with 33 percent estimating losses of more than 10 percent, according to KPMG.

Respondents also said they expect the negative profitability trend to extend beyond the short-term Forty-seven percent of overall respondents said they see global semiconductor profitability as volatile, unpredictable or declining over the next three years, KPMG said.

- Dylan McGrath
EE Times

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