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A year later, chip industry optimism wanes, says analyst

Posted: 19 Dec 2013 ?? ?Print Version ?Bookmark and Share

Keywords:KPMG? chip industry? confidence survey? consumer electronics?

According to the latest chip industry survey by KPMG LLP, confidence in an industry recovery in the year ahead is exactly where it was one year ago. The business consultancy firm said the results show that while growth rate expectations are moderating, executives see this as due to the broadening application of semiconductors leading to a reduced significance of boom-and-bust cycles in consumer electronics.

KPMG surveyed 193 semiconductor industry business leaders, with nearly half of them in companies based in the Asia Pacific region, to produce the semiconductor industry confidence index. The index remained flat at 57 compared with the previous year, which represents continued positive sentiment towards revenue and profit growth.

In the 2012 survey, the index increased had jumped to 57 from 46 the previous year, indicating expectations of strong industry growth. The index at 50 would represent a neutral position between growth and contraction. However, KPMG also noted that the 2013 confidence index shows a reduction in the rate of change and therefore suggests less momentum behind the idea of a sustained industry recovery.

About three-quarters of the semiconductor executives, a similar proportion to 2012, said their companies' revenue growth will increase in the next year. However, those expecting revenue to increase more than 10 percent dropped by a third.

At the same time business leader are more optimistic about industry profitability. Some 78 percent said profits will increase in 2014 compared to 71 percent in 2012 and the executives anticipating 6 to 10 percent hike in industry profitability jumped by almost 50 percent.

"Muted optimism best describes the semiconductor outlook for 2014, and lower levels of anticipated revenue growth reflect more short-term uncertainty than a year ago," said Gary Matuszak, global chair of KPMG's technology, media and telecommunications practice. "We see reductions at the upper ends of growth predictions yet higher percentages of respondents predicting modest improvements. This reflects both the industry's penetration into broader applications and broader geographic markets, resulting in less volatility combined with a slowing growth rate for mobile devices."

Ron Steger, KPMG global semiconductor practice leader, said: "As computing declines in relative importance for the semiconductor industry, the companies that had the foresight to identify and invest in emerging application markets such as automotive and medical, as well as devices that enable the emerging Internet of things, will be well-positioned to enjoy competitive advantages."

- Peter Clarke
??EE Times Europe

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