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Semiconductors: As the backbone of the connected world, the industry’s future is bright

Semiconductors: Backbone of the connected world

KPMG’s 14th annual global semiconductor outlook report discusses how industry leaders view applications, strategic priorities, R&D, industry issues, and threats to growth in light of semiconductors being the building block of the connected world.

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Lincoln Clark

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KPMG in the U.S.

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Semiconductors: Backbone of the connected world

Welcome to KPMG’s 14th annual Global Semiconductor Industry Outlook. Each year, we distribute this report to help semiconductor CEOs, COOs, CFOs, and VPs of strategy/corporate development and members of the ecosystem understand the key trends, challenges, and opportunities in the industry.

KPMG, in collaboration with the Global Semiconductor Alliance (GSA), surveyed semiconductor executives from across geographies, company sizes, and industry segments about their outlook for 2019 and beyond. This year, our research included a larger contingent of emerging semiconductor businesses. Despite their smaller size, these innovative companies are making significant investments in new technologies and applications, are growing fast, and are poised to play key roles in the industry going forward. Their perspectives are essential for understanding the outlook for the semiconductor industry. Key findings included:

  • For the first time, Internet of Things (IoT) was ranked as the top application driving revenue over the next year, surpassing wireless communications. Artificial intelligence and automotive both moved up the list too, ranking third and fourth, respectively.
  • “Increasing R&D costs” was named the biggest issue facing the industry, tied with “Cross border regulation”. 
  • “Innovation and expanded R&D” was identified as the top strategic priority even though “Increasing R&D costs” is the biggest industry issue. This underscores the need to keep pace with the ever-expanding scope of connected devices and the software to run and integrate them.
  • More than one third (35%) of the respondents disclosed their R&D spending is not very efficiently aligned with their market opportunities.
  • “Talent risk” was voted the greatest threat to semiconductor companies’ growth.

Here are some steps that company executives can consider moving forward:

  • Embrace the connected world. While additional customer requirements and potentially more complex supply chains can create challenges, leading companies will seize these opportunities and strategize ways to secure future revenue streams.
  • Make product and cybersecurity part of corporate DNA
  • Strive to increase R&D efficiency
  • Proactively address the talent and skills gap

Download the publication and visit KPMG’s global semiconductor practice page to see additional thought leadership on the semiconductor industry.

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