Semiconductors, are they really good?

Latest update time：2024-05-02

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In 2023, the semiconductor industry will face a series of headwinds. Inflationary pressures, geopolitical uncertainty, excess inventory, ongoing supply chain disruptions, demand challenges in the PC and mobile device markets, and a scarcity of technical talent combined to cause global revenue to decline by 8.2% compared to 2022. Looking ahead to 2024, while some of these challenges remain, the overall industry outlook is strong, with revenue expected to return to double-digit year-over-year growth.

In our annual survey, 172 semiconductor executives from around the world provide their views on a range of financial, operational and strategic issues. Following a global revenue contraction in 2023, 83% of respondents expect their company's revenue to grow.

Likewise, 85% of respondents believe overall industry revenue will grow, but it is worth noting that the number of respondents who expect industry revenue to increase year-on-year has increased significantly (64% in last year's survey).

There appear to be some positive tailwinds in 2024. Generative artificial intelligence (Gen AI), cloud computing and data centers, the number of semiconductors in cars, and growing aerospace technologies are all on the rise. The combination of the number of semiconductors in cars and growing aerospace and defense budgets will help the industry overcome some of the broader economic and geopolitical market risks.

The top concern of semiconductor company executives remains talent, and this is the third consecutive year that the industry has ranked talent as a top issue. Not surprisingly, talent development and retention are also top strategic priorities, with competition for talent once again emerging as the biggest impact as non-traditional semiconductor companies continue to improve their silicon capabilities.

Thirty percent of semiconductor leaders believe there is excess inventory, up from 24% last year, although inventory digestion in many segments occurs in 2023. However, a growing number of leaders (19%) believe that increased demand from artificial intelligence and other emerging technologies will prevent excess inventory. Twice as many leaders hold this view compared to last year (9%).

2024 will mark the beginning of another cyclical uptick in the semiconductor industry.

Main findings

1. Financial expectations

Revenue and earnings outlook are stronger than a year ago

Despite concerns about economic headwinds and slowing demand for semiconductor products, 83% of respondents expect their company's revenue to grow in 2024, which is a slight increase from 81% last year. However, growth forecasts are slightly lower. In this year's survey, 40% of respondents said they expected their company's revenue to grow 11% or more, compared with 50% last year.

Looking more broadly, 85% believe industry revenue will grow in 2024. This is 21 percentage points higher than last year's survey. Relevant forecasts from World Semiconductor Trade Statistics show that global semiconductor sales are expected to grow by 13.1% to US$588 billion by 2024. In the long term, the industry is expected to achieve $1 trillion in global revenue by 2030.

In hindsight, executives' outlook for 2023 may have been overly optimistic, as slowing demand and rising inventories in early 2023 caused overall semiconductor industry revenue to be lower than in 2022.

Forecasts for operating profitability growth across the industry in this year's survey are also much stronger (70%) than last year (44%). This reflects the expected rise in demand and firmer unit prices, which are already starting to play out in memory. Earnings expectations should also be higher as many companies have implemented cost-cutting measures over the past 18 months.

Capital spending may be affected by timing of government subsidies

Capital expenditure (CapEx) expectations are similar to last year, with 55% of respondents expecting an increase, 31% expecting no change, and 14% expecting a decrease, compared to last year's survey results. 62%, 23% and 15%.

45% of respondents expect no change or reduction in capital spending, which is closer to 50/50 than the question of revenue and profitability. It's possible that concerns about interest rates are holding companies back from committing to such spending. Slowing demand may also reduce the need to build further capacity in the short and medium term. Or, given the various government subsidy programs in the U.S., Asia and Europe, there appears to be a lag between when companies apply and when they actually receive funding and start or restart projects.

This time last year, there was excitement about the US Chip Act and many companies were talking about expansion. While this enthusiasm remains, it appears to have waned, and as applications are submitted and grant applicants evaluate the rules and compliance requirements, a more realistic stance has taken hold.

R&D spending forecast unchanged from last year

As for R&D spending, expectations for 2024 are slightly lower than 2023, but still strong. In this year's survey, 69% of respondents expected R&D spending to increase, down from 75% last year. Regionally, the US is in line with the global average at 67%, while European respondents are expected to be slightly lower (56%).

Companies in the Asia-Pacific region are very enthusiastic about R&D spending in 2024, with 84% of companies expecting R&D spending to increase and no respondents expecting a decrease. In contrast, 10% of executives in the United States and 17% in Europe expect R&D budgets to decline.

While China still lags behind Taiwan, South Korea and Japan in R&D spending, China's massive investment plans in the semiconductor industry will be a factor in the region's expected growth in this area.

Labor force growth slows

Last year, 71% of respondents said they expected their company's global headcount to grow. Looking ahead to 2024, this outlook drops significantly to 55%, with 45% still believing the workforce will be flat or declining, even after many companies implemented layoffs in 2023.

By comparison, workforce growth expectations in the U.S. and Europe are in line with the global survey average at 54%, while 66% of respondents in Asia Pacific believe their workforces are growing, which may also be a collective reflection on China's semiconductor ambitions. respond.

Talent has been the focus of the semiconductor industry for many years. There are simply more open positions than qualified candidates. In fact, a recent study predicted that by 2030, the U.S. semiconductor industry alone will be short of 67,000 skilled workers.

Semiconductor Industry Confidence Index 2024

After reaching an all-time high of 74 points in 2022, the Semiconductor Industry Confidence Index (the Index) fell to 56 points in 2023 and 54 points in 2024. A score above 50 indicates a positive outlook. So, realistically, after a down year like 2023, 54 points is still encouraging.

This year, revenue growth was the index's strongest input, reaching 69. Labor force growth was the weakest component, falling 9 percentage points. Except for profitability, all sub-indexes were lower than last year.

Profitability, the only component of the index that measures how respondents feel about the industry relative to their own companies, rose 14 points to 53 points from 39 points, with this bottom-line metric benefiting from lower capital spending expectations discussed earlier.

The industry has a number of positive factors propelling it forward in 2024, which are likely to boost index scores in the coming years.

2. Response plan

Semiconductor companies adjust capital spending plans

Despite the growing demand for processing power and speed in the artificial intelligence, high-performance computing and automotive industries, concerns about an economic slowdown in 2024 remain. These economic concerns, along with a dynamic geopolitical landscape that includes multiple government elections, are likely to contribute to respondents' pessimistic views on the outlook for capital spending and R&D spending.

As for what specific actions semiconductor companies may take to respond to the economic environment, more than half (51%) said they have delayed or plan to delay capital expenditures. This is close to what respondents expected when asked directly about capital spending - 45% expected no change or reduction in capital spending.

Some regional differences do exist:

在美国，排名第一的举措是降低库存水平(46%)，紧随其后的是推迟资本支出和裁员(两者均为43%)。
欧洲领导人认为推迟资本支出和减少库存的比例远高于平均水平(分别为66%和51%)，而裁员的比例远低于平均水平(22%)。
在亚太地区，“未列出的其他削减成本措施”以55%的比例位居榜首，裁员比例低于平均水平(29%)。

供应链多元化仍然是运营议程的重中之重

在美中贸易紧张局势持续、乌克兰和中东冲突持续、关键技术国有化不断扩大的背景下，保持供应链的弹性仍然是半导体公司的首要任务。

连续第二年，增加地域多样性是企业未来三年计划的首要供应链行动。为了实现供应链生态系统的多样化，企业正将目光投向日本、韩国和越南等其他亚太国家。当然，将供应链资源增加一倍或三倍是一种昂贵的风险降低策略，这是公司在分配资源时必须考虑的另一个因素。

供应过剩的观点逐年增加

一年前，一些行业仍担心库存短缺。这种担忧已经缓解，现在几乎不用担心由于缺乏产品而失去收入。似乎受访者认为该行业已经巩固了供应链，因为只有8%的领导者认为未来4年将再次出现短缺。

随着芯片短缺的缓解，我们向行业领导者询问了供应过剩的前景或现状。去年，近四分之一(24%)的受访者表示，他们认为市场上已经存在过剩库存。在今年的调查中，30%的人现在有这种感觉，另有12%的人认为库存过剩阶段将在2024年晚些时候达到。2024年之后，有一种相当一致的观点认为，我们要到2025-2027年才能实现过剩。

有趣的是，有相当一部分领导人(五分之一,19%)认为库存不会过剩，或者之前的过剩库存已经被消耗掉了。新一代人工智能和电动汽车等新技术将使芯片的需求与供应保持同步。在去年的调查中，只有9%的人有这种感觉。

作为一个实际问题，芯片库存似乎并不是一个压倒性的担忧，因为对2024年行业收入增长的预测是两位数。

三、增长应用和产品

微处理器成为增长最快的产品

人工智能应用、汽车和高性能设备的处理要求正以前所未有的速度增长。事实上，先进驾驶辅助系统(ADAS)是汽车半导体市场中最大的细分市场，到2027年，其复合年增长率可能接近20%。同样，最近的公司公告表明，汽车终端市场的年增长率将低于2023年。然而，汽车对半导体单元的长期需求只会继续增加。

因此，微处理器一跃成为明年增长机会最大的产品。微处理器去年排名第三，仅次于传感器/MEMS和模拟/射频/混合信号。微处理器上一次被评为增长机会最高的是在2016年的展望中，当时它与传感器和内存并列。

另一个大赢家是内存，由于供应过剩和需求下降，该行业一直处于长期低迷状态。平均销售价格在2022年第四季度开始下降，并在2023年的大部分时间里保持在这一轨道上。不出所料，存储器是去年排名最低的产品，但在今年的调查中上升到第四位。这对存储器来说是一个积极的信号，因为它与潜在的产能过剩和库存消化有关。

汽车行业再次成为推动收入增长的最重要应用领域

随着汽车进一步向电气化、ADAS和自动驾驶发展，汽车行业对先进芯片和零部件的需求出现了爆炸式增长。虽然预计2024年全球汽车销售增长率为2.8%，但半导体领导者仍然连续第二年将汽车视为推动收入增长的最重要应用。事实上，毕马威预计汽车半导体市场将在2040年超过2500亿美元。

尽管芯片短缺有所缓解，且半导体行业对汽车行业持乐观态度，但汽车公司自身仍对产品供应存在一些担忧。在最新的毕马威全球汽车高管调查中，近一半的汽车领导者(46%)非常/非常关注未来5年半导体组件的供应连续性。另外30%的人仍然比较担心。这有助于解释为什么几家大型汽车公司正试图通过建立自己的芯片部门和/或与半导体公司签订长期供应协议来缓解供应链问题，以保护和创造更多重要硅组件的确定性。

无线通信的下降趋势也很明显。该公司在调查中连续数年被评为最重要的收入驱动因素，但去年跌至第二位，今年并列第三。云/数据中心和物联网去年并列第三，今年与无线通信并列。

人工智能被提上议事日程

人工智能在前两次调查中排名第四，今年跃升至第二位。考虑到领先的AI模型对gpu的大量使用，这与微处理器的向上移动是一致的。

从地区来看，美国受访者对人工智能的看法要乐观得多，将其评为2024年最重要的收入来源，超过汽车。这与美国人对本次调查中其他人工智能问题的乐观反应一致，也可能反映了对2024年汽车销售的更为温和的预期。

欧洲受访者实际上将人工智能排在第四，排在汽车、物联网和工业设备之后。最后，亚太地区的领导者将人工智能排在第五位，排在汽车、无线通信、消费电子和云/数据中心之后。

四、行业问题和战略重点

人才连续第三年成为行业最大的问题，半导体产业国有化紧随其后

世界各地都在规划新的芯片制造设施。然而，尽管有能力将许多任务自动化，但这个高科技产业在熟练工人方面却处于赤字状态。人才风险再次被视为今年行业面临的头号问题。

从地域的角度来看，仅从美国受访者的角度来看，人才风险略落后于半导体技术国有化的问题。在美国，人才风险和地域主义之间的平衡是有道理的。在美国，这些双重担忧与建立新的制造设施和建立一个对亚洲依赖程度较低的供应链的目标是一致的。

不幸的是，美国人才供应的前景并不乐观。事实上，根据最近的一份报告，到2030年，6.7万个技术、计算机科学和工程岗位可能会空缺。

亚太地区的受访者一致认为，人才风险是行业面临的首要问题。不过，他们确实认为，与同行相比，较高的代工成本和产能过剩是更大的问题。

欧洲受访者也最担心人才风险、对地域主义和全球通胀反应的过度关注。欧盟正在努力工作，并投入巨资吸引新的芯片公司，并让当地现有企业扩张或新建工厂。欧洲芯片技能2030学院计划旨在为欧洲芯片法案的成功提供50万微电子专家的管道。如果没有这些熟练工人，人们担心欧洲将无法接近其2030年制造能力的目标。

在去年的调查中，领土主义/国有化与全球通货膨胀并列，今年则稳居第二。2022年底，企业担心全球通胀和政府可能采取的行动，尤其是未来三年。今年，受访者似乎更有信心全球将或已经控制住通胀。尽管高代工成本仅被四分之一的受访者列为前三大问题之一，但它是同比增幅最大的问题，增长了7个百分点。

人才也是战略重点

作为未来三年的战略重点，人才在去年的调查中有所下降，但仍位居榜首，其次是供应链灵活性。紧随前两项优先事项之后的是实施新一代人工智能和数字化转型，这两项排名非常接近。

尽管人才缺乏是一个全球性难题，但美国受访者将其与供应链灵活性相提并论。然而，在欧洲和亚太地区，人才被评为最高战略优先事项的比例高于平均水平。

In last year's survey, digital transformation covered all technologies including artificial intelligence, 5G and blockchain, and was ranked as the third strategic priority. This year, the new generation of artificial intelligence was broken out due to its sudden surpassing of other technologies and listed as one of the three strategic priorities.

Although reducing cybersecurity risks ranks lower on the global average, U.S. respondents ranked it fourth, well above the average. This is consistent with new cyber risk management disclosure rules that listed companies must now comply with. European and Asia-Pacific leaders rank reducing cybersecurity risks as a very low priority.

While only 20% of respondents ranked participating in government subsidies among their top three strategic priorities over the next three years, 42% said they had already applied or planned to do so in the next 12 months. Of these, 32% plan to require $250 million or more. As of the end of 2023, more than 100 pre-applications and complete applications for government funding have been submitted to the U.S. Department of Commerce under the CHIP Act, with funding announcements expected to begin in early 2024. It will be interesting to see the mix of manufacturing, R&D and workforce projects.

Non-traditional semiconductor companies add pressure to talent issues

As if the development of the local semiconductor ecosystem has not put enough pressure on the talent pool, semiconductor-related companies (such as platform giants, automobile companies, etc.) have been building their own chip design capabilities in the past few years.

More than half (56%) of respondents again cited increased competition for talent as the biggest impact these companies have on the semiconductor industry. This proportion is higher than last year's survey results.

Companies focus on a broad set of strategies to attract talent

Despite the promise of the semiconductor industry, access to the right number of capable workers is a glaring weakness. For companies around the world, this is a challenge that matters to their competitive advantage. University partnerships to educate more STEM students are the first actions semiconductor companies take to acquire talent, but they are closely followed by strategies aimed at retaining existing employees: strengthening employee value propositions, offering remote/hybrid positions, and offering annual bonus.

The U.S. performs in line with the global average on the first two strategies and is more likely than other regions to offer remote/hybrid arrangements and annual bonuses. The U.S. is also well above average when it comes to hiring workers from traditionally underrepresented groups, but well below average when it comes to retraining its workforce.

European respondents perform above average on all three strategies and are more likely to implement mentorship programs. However, they are well below average when it comes to implementing automation and artificial intelligence so employees can focus on more strategic work.

Asia Pacific leaders are most keen on university partnerships and workforce retraining rather than embracing remote/hybrid working. Notably, companies in the Asia-Pacific region are implementing automation and artificial intelligence more than the United States and Europe.

Companies want to retain existing employees and try to find ways to acquire new talent by reinforcing the company's values, culture and non-monetary benefits.

Semiconductor companies expect widespread adoption of next-generation artificial intelligence over next two years

In this year’s survey, implementing next-generation AI was one of the top three strategic priorities and one of the means companies are using to ensure they have the talent they need to achieve their growth goals. But where exactly are semiconductor companies looking to implement the next generation of AI in their organizations?

The top function respondents expect to implement next-generation AI within the next two years is R&D/Engineering, followed by Marketing and Sales, then Manufacturing and Operations. Considering the complexity and high pay of these functions, the time and cost-effectiveness of implementing a new generation of AI has huge benefits for organizations.

Interestingly, in a recent independent survey by KPMG, 78% of executives across industries ranked customer service operations as the top area where they expect to apply the first generation of AI15, while 35% of semiconductor leaders expect it to be in customer support Implement this technology. However, the semiconductor industry is one of the top industries in terms of R&D spending as a percentage of sales.

On most of these features, the United States ranks above the global average. This is consistent with the strategic priorities that the United States is overly focused on compared to other regions. As a global leader in artificial intelligence, it is only logical that American companies want to implement general artificial intelligence in more functions.

Europe is below average in all functions except procurement and supply chain management. Asia-Pacific is over-represented in procurement and supply chain management, human resources, manufacturing and operations.

5. What should we do next?

Across several topics covered in this report, the following actions are recommended for semiconductor companies:

Grow your future talent pool

Weigh the short-term cost-benefit of layoffs against the potential risk of not taking full advantage of the next upgrade cycle. Start by cutting costs in non-HR areas, such as non-essential marketing activities, third-party spend and travel.
Assess what skills your company will need in the future as a result of the impact new technologies like the hybrid workplace and artificial intelligence will have on the nature of work.
Expand your talent pool by tapping into non-traditional talent. Changing the way you approach your workforce to include non-traditional talent can help you fill open positions and increase retention of sought-after talent once they're hired.

Develop your Gen AI strategy

With so many potential use cases, fast-moving semiconductor companies can leverage Gen AI to gain an early adopter advantage. KPMG has identified five key actions that businesses can start taking now to jump-start their next-generation AI agenda.

Address data and data systems
Identify and pursue next-generation AI use cases such as supply chain, front office, software development, finance and tax.
Develop deployment and governance strategies
Ready the workforce
Find the right partner

Embrace smart supply chain

Supported by advanced technologies such as artificial intelligence, data analytics, automation, machine learning, the Internet of Things, and blockchain, a new model is emerging in the field of semiconductor supply chain management—a model in which organizations can Respond to daily requests and proactively resolve issues to reduce errors and inefficiencies.

The result is greater visibility, transparency and traceability. Most importantly, organizations will be more resilient to future supply chain shocks. But time is of the essence.

Research methods

The insights in this report come from a web survey of 172 senior executives at global semiconductor companies conducted by KPMG and GSA in the fourth quarter of 2023. In some cases, the percentages may not total 100% due to rounding. The demographics of the respondents were as follows:

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