AI technology is making semiconductor leaders more optimistic about 2025, but headwinds could come from geopolitical and talent retention concerns.
These are a number of the predictions within the twentieth annual KPMG Global Semiconductor Outlook report from the U.S. accounting, tax and advisory firm and the Global Semiconductor Alliance (GSA).
About 92% of semiconductor executives surveyed for the survey predicted overall industry growth in 2025.
New data from KPMG and GSA guarantees continued demand for chips because of AI, cloud, data centers, wireless communications and automotive applications, showing clear optimism for 2025 amongst semiconductor executives.
The KPMG Semiconductor Industry Confidence Index rose to 59 from 54 in 2023, indicating increased optimism (a reading above 50 indicates a more positive than negative outlook) and increased confidence in the next aspects: company revenue growth, profitability growth, Workforce growth, research and development (R&D) spending and capital expenditure.
“AI underpins the industry’s near-term growth and revenue expectations,” Mark Gibson, head of technology, media and telecommunications at KPMG, said in a press release. “The industry’s near-term upside is evident, but the businesses that may manage their supply chains and attract and retain talent shall be well positioned to sustain and profit from the AI boom.”
Despite the widespread optimism, executives still expect significant challenges in 2025, including geopolitical territorialism – similar to tariffs and trade restrictions – and ongoing talent issues within the industry. (President-elect Donald Trump is promising to impose tariffs on his first day in office, January 20.)
Strengthening supply chain resilience and adaptability and improving talent development and retention shall be critical as demand for chips continues to grow. Navigating this complex landscape in 2025 would require adaptive strategies.
About the survey
In the fourth quarter of 2024, KPMG and GSA conducted the twentieth annual global semiconductor industry survey, gathering insights from 156 semiconductor industry executives about their outlook for the industry in 2025 and beyond. More than half of respondents got here from corporations with annual revenue of $1 billion or more.
Semiconductor industry executives across the board are positive about 2025, with the arrogance index increasing five points year-over-year (from 54 to 59). Interestingly, the smaller corporations, defined as organizations with annual revenue of lower than $100 million, have probably the most positive outlook.
In general, all semiconductor corporations have positive scores on the Confidence Index, with smaller corporations being probably the most optimistic for 2025 and potentially seeing opportunities for rapid revenue increases given their earlier stages of development.
Survey participants included 58 large corporations ($1 billion or more in annual revenue); 54 mid-sized corporations ($100 million to $999 million in annual revenue); and 68 small businesses (lower than $100 million in annual revenue).
Semiconductor industry executives are very optimistic about revenue growth for his or her company and the industry as a complete. More than a 3rd forecast sales growth of a minimum of 10%.
The overwhelming majority (86%) expect their company's revenue to extend in 2025, with almost half (46%) expecting growth of greater than 10%. And 92% forecast overall industry revenue growth, and a 3rd (36%) forecast industry revenue growth of greater than 10%.
For the primary time within the outlook's history, AI is the highest revenue driver in semiconductors, displacing the automotive industry, which has held the highest spot for the past two years.
Therefore, microprocessors, including graphics processing units (GPUs), used for AI, are seen as the important thing product opportunity for industry growth, ahead of memory and sensors/MEMs.
AI enablers similar to high-bandwidth storage are the production technology expected to have the most important impact on the industry over the subsequent three years. Other key revenue drivers expected in 2025 include cloud/data centers (increased to 2).nd place), wireless communication (stays in third placeapprox place) and automotive (dropped to 4th place).Th place, crucial sales driver up to now).
Geopolitical concerns, particularly territorial tensions and trade restrictions similar to tariffs, are the important thing issues shaping the industry's supply chains. Talent risk stays an ongoing issue as demand for chips increases.
Territorialism (including tariffs and trade restrictions) coupled with talent risk is the most important issue the industry will face over the subsequent three years. However, territoriality was clearly the most important problem for giant corporations with annual revenues of $1 billion or more.
Semiconductor industry executives surveyed imagine armed conflict and tariffs are the 2 geopolitical problems with best concern that might impact the semiconductor ecosystem over the subsequent two years. Government subsidies and the nationalization of semiconductor technology are also at the highest of the list.
In response, leading semiconductor corporations are increasing geographic diversity to enhance supply chain resiliency. Making the provision chain more flexible and adaptable to geopolitical changes (linked to developing and retaining talent) is the highest strategic priority after the corporate ranked second in last 12 months's survey.
Executives are also on high alert for disruption as non-traditional semiconductor corporations (tech giants, platform corporations and automotive corporations) carve out their very own space within the industry.
While most executives (39%) still see competition for talent as crucial impact on the industry over the subsequent three years, the emergence of latest competitors has develop into almost as big a priority for executives (35%) Change within the industry indicates outlook.
By comparison, last 12 months only 19% of semiconductor executives cited the emergence of latest competitors as a priority.
“Tech giants and established semiconductor corporations are beginning to fight for market share. Ongoing technical developments and optimizations of chips for AI aim to offer alternatives for AI training and inference capabilities,” said Lincoln Clark, global semiconductor leader at KPMG, in a press release. “As the industry becomes increasingly competitive, significant investment and revolutionary strategies shall be critical for corporations to not only survive but thrive on this rapidly evolving landscape.”
The full Global Semiconductor Industry Outlook report shall be published in early 2025.
