This report is part three of KPMG’s 15th annual Global Semiconductor Industry Outlook, focusing on the biggest strategic priorities and issues facing the industry over the next three years. The research in the report is drawn from a survey of 195 senior global semiconductor executives and was conducted in the fourth quarter of 2019 by KPMG and the Global Semiconductor Alliance (GSA).
Innovation and expanded R&D ranked as the clear top strategic priority of semiconductor companies over the next three years. It is named by more than half of respondents as a top three priority, representing a 10 percentage point increase since last year’s survey. As innovation and R&D take precedence, there are signs that companies are becoming better at it. When asked to rank the biggest issues facing the semiconductor industry during the next three years, “increasing R&D costs” dropped 19 percentage points from last year’s survey and fell from the number one to the number three issue.
Strategic priorities of semiconductor companies over the next three years
Biggest issues facing the semiconductor industry during the next three years
The quest for semiconductor talent is an important result of the emphasis on innovation and R&D. And in the current environment where M&A levels are low, retaining and developing talent is crucial. But the global race for talent is fierce. Talent development and management ranks second among strategic priorities and are growing concerns of semiconductor executives compared to last year’s survey. In addition, talent risk is the second biggest industry issue cited by all respondents.
Territorialism was virtually tied with talent management (37 percent vs. 36 percent) as the top industry issue. As tariff disruption creates industry cost pressures, semiconductor companies must make difficult financial choices, including whether to swallow additional costs or pass them on to customers. Supply chains are also feeling the effects, as chipmakers and their customers consider switching to vendors or manufacturing locations not subject to tariffs in order to reduce tariff risk. To learn more about the impact of tariffs on the semiconductor industry, see Part 1 of the Global Semiconductor Industry Outlook 2020.