AI know-how is making semiconductor leaders extra optimistic about 2025, however headwinds might come from geopolitical and expertise retention considerations.
These are among the predictions in KPMG‘s twentieth annual International Semiconductor Outlook report from the U.S. audit, tax and advisory agency in addition to the International Semiconductor Alliance (GSA).
About 92% of the semiconductor executives interviewed for the survey forecasted total trade development in 2025.
With guarantees of ongoing demand for chips due to AI, cloud, information facilities, wi-fi communication and automotive functions, new information from KPMG and GSA reveals vital optimism for 2025 amongst semiconductor executives.
The KPMG Semiconductor Trade Confidence Index rose to 59, up from 54 in 2023, indicating elevated optimism (a worth above 50 signifies a extra optimistic outlook than unfavourable), and showcasing bolstered confidence throughout the next elements: Firm income development, profitability development, workforce development, analysis and growth (R&D) spending, and capital expenditures.
“AI underpins the industry’s near-term growth and revenue expectations,” mentioned KPMG know-how media & telecommunications chief Mark Gibson, in a press release. “The upward trajectory for the industry in the short-term is clear, but the companies that can manage their supply chains and attract and retain talent will be the ones well-positioned to sustain and benefit from the AI boom.”
Regardless of widespread optimism, executives nonetheless anticipate vital challenges in 2025, together with geopolitical territorialism—akin to tariffs and commerce restrictions—and ongoing expertise points throughout the trade. (President elect Donald Trump is vowing to impose tariffs on his first day in workplace on January 20).
Strengthening provide chain resilience and suppleness, together with enhancing expertise growth and retention, can be essential as demand for chips continues to develop. Navigating this advanced panorama in 2025 would require adaptive methods.
Concerning the survey
Key information about KPMG’s chip market survey for 2025.
Within the fourth quarter of 2024, KPMG and the GSA carried out the milestone twentieth annual world semiconductor trade survey, capturing insights from 156 semiconductor executives about their outlook for the trade in 2025 and past. Greater than half of the respondents had been from corporations with $1 billion or extra in annual income.
Semiconductor executives have optimistic outlooks for 2025 throughout all elements, with a five-point Confidence Index improve year-over-year (from 54 to 59). Apparently, the smaller corporations, outlined because the organizations with lower than $100 million in annual income, have probably the most optimistic outlook.
Throughout the board, all semiconductor corporations have optimistic Confidence Index scores, with smaller corporations displaying probably the most optimism for 2025, doubtlessly seeing alternatives for fast income will increase attributable to their earlier phases of growth.
Amongst these collaborating within the survey, there have been 58 giant corporations ($1 billion or extra in annual income); 54 mid-size corporations ($100 million to $999 million in annual income); and 68 small corporations (lower than $100 million in annual income).
Semiconductor executives are very optimistic about their firm and the general trade income development, with multiple third predicting income development by a minimum of 10%.
The overwhelming majority (86%) anticipate their firm’s income will develop in 2025, with nearly half (46%) anticipating development to exceed 10%. And 92% forecast total trade income development, and one-third (36%) predict trade income development of greater than 10%.
For the primary time within the historical past of the outlook, AI is crucial semiconductor income driver, displacing automotive, which held the highest spot for the previous two years.
Because of this, microprocessors, together with graphics processing models (GPUs) used for AI, are seen because the main product alternative for trade development, forward of reminiscence and sensors/MEMs.
AI enablers, akin to excessive bandwidth reminiscence, are the manufacturing know-how that’s projected to have the best affect on the trade over the subsequent three years. Different key income drivers anticipated in 2025 embody cloud/information facilities (rose to 2nd place), wi-fi communications (remained in third place), and automotive (dropped to 4th place, beforehand the highest income driver).
Geopolitical considerations, notably territorial tensions and commerce restrictions like tariffs, are crucial points shaping the trade’s provide chains. Expertise danger stays a persistent concern as chip demand surges.
Territorialism (together with tariffs and commerce restrictions) tied with expertise danger as the most important difficulty dealing with the trade over the subsequent three years. Nevertheless, territorialism was the clear-cut greatest difficulty amongst giant corporations with $1 billion or extra in annual income.
Semiconductor executives surveyed view armed conflicts and tariffs as the 2 most regarding geopolitical issues that would have an effect on the semiconductor ecosystem over the subsequent two years. Authorities subsidies and the nationalization of semiconductor know-how additionally rank close to the highest.
In response, semiconductor leaders are rising geographic range to enhance provide chain resiliency. Making the provision chain extra versatile and adaptable to geopolitical adjustments (tied with expertise growth and retention) is the highest strategic precedence, after being named second in final yr’s survey.
Executives are additionally on excessive alert for disruption as non-traditional semiconductor corporations (tech giants, platform corporations, and automotive corporations) carve out their very own place within the trade.
Whereas most executives (39%) nonetheless view competitors for expertise as the first affect to the trade over the subsequent three years, the emergence of recent opponents has turn into an nearly equally vital concern amongst execs (35%), signaling a shift within the trade’s outlook.
To match, final yr solely 19% of semiconductor execs cited the emergence of recent opponents as a priority.
“Tech giants and established semiconductor players are starting to battle for market share, with ongoing technical developments and optimization of chips for AI aiming to enhance and provide alternatives for AI training and inferencing capabilities,” mentioned KPMG world semiconductor chief Lincoln Clark, in a press release. “As the industry becomes more competitive, significant investments and cutting-edge strategies will be essential for companies to not only survive but thrive in this rapidly evolving landscape.”
The total International Semiconductor Trade Outlook report can be launched in early 2025.
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