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Chip execs' confidence weakening

Posted: 21 Dec 2011 ?? ?Print Version ?Bookmark and Share

Keywords:chip market? semiconductor industry? IC growth?

Consultancy company KPMG LLC's Semiconductor Business Confidence Index has fallen to 46 in 2011, down 14 points from 2010's 60 and 61 in 2009. The index is a metric based on survey data gathered by KPMG.

In 2008, the index stood at its lowest at 36. This means that even though the industry conditions as we enter 2012 is weak, it is still not as severe as what existed at the beginning of 2009.

The index is the result of a survey of 155 senior level executives made in October and November from a range of companies including IDMs, foundries and fabless chip companies.

Revenue and profitability growth expectations are down from a year ago and the executives to do not plan to hire as many people, the survey showed.

For example, 41 percent of the semiconductor executives surveyed expects that revenue will grow by more than 5 percent next year, compared with 78 percent a year ago, and 87 percent in 2009. They also see less growth in profitability, with 30 percent anticipating profits to increase by greater than 5 percent over the next 12 months, compared with 37 percent last year.

Some 27 percent, compared with 46 percent a year ago, anticipate capital spending to increase by more than five percent. Thirty-three percent expect more than a five percent rise in R&D spending, compared with 47 percent a year ago. And 19 percent of the respondents predict workforce growth of greater than 5 percent, compared with 29 percent in 2010.

"Executives continue to pursue their growth agendas, and will be acquisitive, but remain very apprehensive about the direction of the economy," said Gary Matuszak of KPMG who is in charge of the technology, media and telecommunications group.

However, on a question of geographic importance the United States has been rising in significance.

In 2008 only 38 percent of exectives felt the U.S. was an important market for revenue growth. In 2010 it had risen to 47 percent and in the 2011 survey 50 percent of executives thought the U.S. was important putting it second, behind China with 60 percent, and ahead of Japan ranked third with 37 percent.

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