8 in 10 semiconductor executives are optimistic about revenue growth

This is despite the normal correction cycle of the industry and predictions of a recession.

Around 81% of leaders in the semiconductor industry expect that their company's revenue will increase over the coming year, with 23% expecting growth of more than 20%, according to the 2023 KPMG Global Semiconductor Industry Outlook.

However, these expectations are lower than those expressed in last year's KPMG survey when 95% of respondents predicted their company's revenue to increase.

The semiconductor industry is facing new challenges such as fears of a downturn, increased geopolitical focus, risks to the supply chain, and rising global inflation, which are hampering leaders' outlook.

Stressors in the ecosystem, particularly cost pressures from increased prices for capital, materials, and labour, are having a more significant impact on the industry-wide outlook. These cause some uncertainty in industry growth and profitability projections.

“Almost two-thirds of semiconductor leaders are predicting industry revenue will increase,  not a contract. That’s a positive indicator for the upcoming year given the current economics and  the fact the industry is almost at the point of having excess inventory,” said Mark Gibson, global sector head of Technology, Media & Telecommunications, KPMG International.

The report also showed that company growth expectations outpace those for the broad industry, with 64% of respondents forecasting that the industry's revenue will grow in 2023, compared to predicted growth of 4.1% from the World Semiconductor Trade Statistics. 

There is also an even split between those who think industry operating profitability will increase (44%) versus decrease (43%). The report suggested that revenue growth is not all being passed through to the bottom line, mainly because inflation in supply chains is being absorbed by chipmakers and not being passed on to customers.

Geopolitical issues also seem to have a notable influence on industry revenue projections. In the report, 41% of semiconductor executives are concerned that the Russia-Ukraine war will materially impact industry revenue growth in 2023, a significant increase from a prior KPMG research conducted in May 2022, where only 25% expressed that view. The indirect impact of the war is manifested in the high cost of energy, which has driven up inflation and interest rates and slowed demand.