Tuesday, August 14

AI demand for semiconductors at “lower end of hockey stick”, says KPMG

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There’s room to run for semiconductor demand as a result of artificial intelligence technologies, according to an industry advisory unit at KPMG.

In a recent report, the majority of industry executives said they expect their companies — and the industry as a whole — to increase revenue, largely driven by diversification into revolutionary new technology segments, such as artificial intelligence, the internet of things, and autonomous vehicles.

Most executives expect profitability to increase alongside revenue, as companies obtain revenue from new markets and rationalize costs in research and development processes using cutting-edge techniques, according to the report.

 

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Companies also plan to increase investment in their workforce, equipment, and R&D.

“The evolution of technologies that demand semiconductors,  for example IoT, automotive, and artificial intelligence is still on the lower end of the hockey stick. This potential is driving the sentiment that the semiconductor industry still has a ways to go in the current expansion cycle,” said Chris Gentle, partner in KPMG’s Global Semiconductor Practice in the US.

Source: KPMG

China focus

Measuring by region, KPMG found that executives in China are generally more bullish across the investment categories that feed the confidence index: capital spending, workforce spending, and R&D spending.

“This makes sense given that China—one of the world’s largest consumers of semiconductors thanks to its booming telecommunications and electronics supplier businesses—needs to develop or acquire intellectual property to achieve its goals of becoming a global semiconductor leader,” the report said, citing data from South China Morning Post.

KPMG’s report noted that early support from China’s National IC Investment Fund largely targeted manufacturers and M&A initiatives, while going forward it will focus much of the $30 billion in its next capital raise on three sectors: memory, compound semiconductors, and IC design applied to IoT, 5G, artificial intelligence, and smart vehicles, according to EENews research.

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