The Semiconductor Business Confidence Index has fallen

Published:2011/12/20 0:30:00 Author:Phyllis From:SeekIC

The Semiconductor Business Confidence Index has fallen to 46 in 2011, compared with 60 in 2010 and 61 in 2009, according to KPMG survey. Although the index is declining, it has not as bad as situations in 2008 when the number was 36. This indicates that industry conditions entering 2012 will be weak but not as severe as those that existed at the beginning of 2009.

The index is a metric based on a survey of 155 senior level executives made in October and November from a range of companies including IDM, foundries and fabless chip companies.

Revenue and profitability growth expectations are down from a year ago. 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.

The executives’ confidence also appears to be fueled by recovering economies in a couple of key regions. China still is viewed as most important for semiconductor product growth, but more executives also foresee the U.S. and European economies recovering and having important roles in industry growth.

In 2008 only 38 percent of executives 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.

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