LONDON – The Semiconductor Business Confidence Index, a metric based on survey data gathered by audit and consultancy company KPMG LLC, has fallen to 46 in 2011, compared with 60 in 2010 and 61 in 2009, the firm said.
Although the index is declining it has not reached the depths of 2008 when it stood at 36. This indicates that industry conditions entering 2012 are weak but not as severe – or at least not as shocking – as those that 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.
One wonders whether changes in the industry ecosystem might contribute to these numbers. If the industry is going through a phase of consolidation the number of pessimistic execs might be outsized compared to the overall industry prospects. Also, perhaps new entrants into the market, such as in China, are not sufficiently represented in the survey.
Some interesting numbers in this. It looks like the expected trend overall is slightly down but may be up in the US and China. But then again, since these really only rank the anticipated importance of different markets, they don't really tell us much about how they expect those markets to actually perform.
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