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Survey: China critical to IC recovery in 2010

Posted: 24 Nov 2009     Print Version  Bookmark and Share

Keywords:IC recovery  China market  semiconductor 

A global survey of semiconductor executives stated that the expected recovery in 2010 has many uncertain dimensions to it.

The survey, conducted by tax and advisory firm KPMG LLP during September and October, found one consistent finding that the China market opportunity is the key to growth. The survey forecasts increased revenue in 2010, increased profitability but only modest job growth. The executives who responded to the survey also anticipate moderate increases, albeit less than revenue, in capital expenditures and R&D next year, with a focus on areas of energy efficient and renewable technology

However, KPMG concluded that the path forward in the near term is uncertain and there is no consensus on the shape of the recovery.

KPMG's study, conducted in collaboration with the Semiconductor Industry Association, surveyed 113 senior level executives in the semiconductor industry including executives at integrated device makers, foundries and fabless chip companies.

The results of the survey produced an increase in KPMG's Semiconductor Industry Business Confidence Index, a measure derived from specific survey responses. This index registered a 61, the equivalent of two years ago and up from 36 in 2008. "For the semiconductor industry, China continues to be viewed as most important for recovery and revenue growth in the next three years but industry executives still see volatility in some markets," said Henry Keizer, KPMG global head of audit, in a statement.

Limited workforce growth
By an almost two-to-one margin, semiconductor executives identified China as the most important country market for revenue growth in three years, followed by the United States and Taiwan.

With the China market in their sights, 87 per cent of respondents said they expect their revenue in 2010 to increase by more than five per cent. More than half (54 per cent) say their revenue gains could exceed 10 per cent next year.

Two-thirds of the semiconductor executives who responded to the survey anticipate their company's global workforce will grow one per cent or more in the next 12 months. Only one-quarter of these executives think the growth could exceed five per cent. Eighteen per cent expect no change in the size of their global workforce, and 16 per cent anticipate a reduction in their workforce.

Executives were split as to what shape they expect the global semiconductor industry recovery to resemble. While one-third anticipates a W-shaped recovery, nearly as many (29 per cent) expect a U-shaped turnaround, with significantly fewer (15 per cent) anticipating a V-shaped rebound and (13 per cent) what is known as a square root sign recovery. This may reflect the differences that are being seen geographically in what has also been described as a LUV recovery.

Half the respondents—five times as many as in 2008—expect capex to grow by more than five per cent and 45 per cent, or twice as many as last year, expect R&D to grow by more than five per cent.

- Peter Clarke
EE Times Europe

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