About 56% of semiconductor industry leaders expect the chip shortage that has plagued us during the pandemic to last into 2023, according to KPMG.
Of course, because of this expectation, the confidence about growing global semiconductor revenues is at an all-time high. Ninety-five percent of respondents said they believe revenue at their companies will grow over the coming year, with 34% expecting growth of 20% or more.
The shortage is rocking the whole economy, driving up prices for electronic goods and making high-end gear such as graphics cards and PlayStation 5s into scarce commodities. Despite persistent supply chain challenges, financial and operational confidence has surged to an all-time high for semiconductor executives according to the 2022 KPMG Global Semiconductor Industry Outlook from KPMG and the Global Semiconductor Alliance. The 17th annual survey features insights from more than 150 global semiconductor executives.
Some 42% of chip executives believe the shortage will end in 2022. U.S. respondents view 2023 as the most likely year,
with 65% saying the supply/demand imbalance is going to push into next year.
Nearly 9 in 10 respondents believe their global workforce will grow in 2022—an increase of nearly 40% over last year’s outlook. This is why Intel CEO Pat Gelsinger has the confidence to spend anywhere from $20 billion to $100 billion on chip factories in the U.S. — so long as a subsidy bill passes Congress. It’s also why inflation is climbing.
“While supply chain and talent headwinds certainly remain, the semiconductor industry is expected to deliver all-time high revenues of more than $600 billion in 2022,” said Lincoln Clark, the partner in charge of KPMG’s global semiconductor practice, in a statement. “As economic pressures recede, confidence in the industry’s growth potential is likely to continue to increase over the next several years.”
As for the future, wireless communications, including 5G infrastructure, smartphones, and other mobile devices, is
considered by far the most important revenue driver.
Respondents expect the automotive sector to emerge as the second most important revenue driver over the next fiscal year.
The internet of things (IoT), recently considered the No. 1 revenue driver, has fallen to No. 3, behind
wireless communications and automotive.
Confidence remains high for the automotive market’s growth. However, the sector is also projected to continue to face supply chain logjams, with some projections saying the wholesale car market will not return to pre-COVID-19, pre-chip shortage levels until at least 2025. While short-term pressures are likely to remain, KPMG estimates the automotive semiconductor market will reach more than $200 billion over the next two decades.
“The semiconductor industry has emerged as arguably the most critical component of our rapidly digitizing global economy,” said Scott Jones, a principal in KPMG’s Global Semiconductor practice. “Persistent demand has renewed focus on the industry, and we expect to see substantial domestic growth and M&A activity as a result over the next several years.”
The report said talent development and retention remains the top strategic priority for industry decision makers. When asked about the impact of various tech giants investing further in their own silicon capacities, respondents cited talent being attracted by these giants as their main concern.
However, overall, only 19% of respondents view nontraditional chip developers emerging as serious competitive threats.
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