KPMG’s Global Semiconductor Outlook publication, entitled “The road to growth in semiconductors”, reveals insight from 153 worldwide semiconductor company executives. The report details strategic priorities, product expectations, perspective on the technology road map, and projections for revenue growth, profitability, and investment. Key findings include:
- The top strategic priority of executives over the next three years is “diversifying into a new business area.” The second is “acquisition, merger or joint venture.” We believe that M&A activity will continue in the industry, but with a fresh focus on acquiring adjacent technologies to spur revenue growth.
- Another avenue to growth lies in honing the organic R&D process so it is properly aligned with the future marketplace. Unfortunately, half of the respondents said their R&D spending is not efficiently aligned with current customers and a significant portion admitted their R&D spending is not efficiently aligned with future growth opportunities. The good news is that a road out of this wilderness can be built with an integrated portfolio management process.
- ASP erosion was identified as the top issue facing the industry over the next three years, fueling the need to diversify.
- Projections call for moderate revenue growth in 2017, and this is having a downstream impact of restrained expectations for operating profitability and investment. Three-year outlooks are similar, indicating that the industry is maturing.
- Sensors/MEMS (microelectromechanical systems) jumped to the top as the sector expected to provide the strongest growth opportunity in 2017. Wireless communications, IoT, and automotive are viewed as the most important applications driving revenue over the next three years.
- Roughly half of the respondents believe that Moore’s law will continue unabated or continue with extended intervals while the other half feels that it has already ended or will end with the current technologies under development. To hedge against this, many companies aim to improve and repurpose existing technologies.