KPMG surveyed 155 semiconductor industry business leaders in companies from all over the world and deduced that the semiconductor industry confidence index edged higher to 59, up from 57 a year ago. A value above 50 is an optimistic outlook on the business environment for the next 12 months. The index is based on survey responses to questions on revenue, profitability, workforce, capital spending and R&D investment.

Growth or no growth?

The respondents do not agree on what stage the semiconductor market is at in terms of its boom-bust cycle. Thus 37 percent believe the industry will be in late expansion in 2015, while 19 percent believe the market will move from growth to contraction during the year, while 8 percent said the semiconductor industry is no longer cyclical!

More than 80 percent of the executives surveyed expect the market to show revenue growth in 2015 but at lower percentage rates than in 2015. Less semiconductor executives than a year ago anticipated 6 to 10 percent growth, while more of them saw a one to five percent increase.

Sensors: highest growth product

In terms of product categories with the most growth the majority of survey respondents (61 percent) predicted sensors will provide the strongest sector growth opportunity in 2015. In terms of end markets, medical (66 percent) and networking and communications (62 percent) will provide the strongest growth opportunity in 2015, according to semiconductor executives.

The biggest drivers of semiconductor revenue in 2015 will be data centers and mobile equipment but over the next three years the semiconductor executives highlighted robotics, automotive sensors, medical imaging, biometrics and security, and wearables as the most important markets.

Next: the end of Moore’s Law

Three sides of the same coin

The biggest challenge the semiconductor industry faces over the next three years is the rising cost of R&D, according to 43 percent of the respondents. Another 37 percent said a lack of technology to maintain the progress of Moore’s Law while 32 percent said the high cost of equipment and plant was the problem.

When asked specifically about Moore’s Law, 26 percent of the semiconductor company business leaders said they expected the benefits of Moore’s Law to continue for the foreseeable future, while 16 percent said it has already ended. Fifty-eight percent said Moore’s Law ceases to apply at manufacturing nodes below 22nm.

450mm wafers pushed back

In a shift from the findings of the 2013 survey, 54 percent said the transition to chip manufacturing on 450mm-diameter wafers will occur between 2015 and 2018, though more likely in 2017-2018 (39 percent). In last year’s survey, 63 percent believed the transition would occur by 2018.

Spending up, mergers down

Additional findings included that: 83 percent of those surveyed said that their company’s semiconductor-related capital spending will increase for the next year, with 22 percent expecting an increase greater than 10 percent. Last year, just 12 percent said spending would increase by more than 10 percent. Two-thirds, down from 73 percent last year, anticipated an increase in the number of merger and acquisition deals in the industry next year.

KPMG’s study, conducted in September, surveyed 155 semiconductor industry business leaders, primarily senior level executives, including device, foundry and fabless manufacturers. More than 87 percent of the companies represented in the survey have annual revenue of $1 billion or more.

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