December 20, 2011 - Semiconductor execs are much less confident about the coming year's business prospects than they were leading into 2011, according to KPMG's annual survey.

The survey of 155 primarily senior-level semiconductor industry executives at device, foundry, and fabless manufacturers (half of which have ≥$1B in annual sales) was conducted in October-November. The full report won't be available the first week of 2011, according to a KPMG spokesperson, but there are some preliminary findings:

- Growth expectations are low. Only 41% expect revenue to grow more than 5% in 2012, way below the 78% polled at the end of 2010 and 89% in 2009. Only 30% expect profit growth to exceed 5%, down from 37% last year. And just 19% see hiring exceeding 5% in 2012, down from 29% in 2010 and nearly at 2008's pessimism (17%).

- Not much for suppliers, either. Only 27% of survey respondents expect more than a 5% industrywide capital spending increase, vs. 46% in 2010. Only 3% are expecting more than 5% R&D spending (vs. 47% in 2010).

- New slogan: "At least it's not 2009!" An index measuring "Semiconductor Business Confidence" slipped to 46, down from 60 in 2010 and 61 in 2009. That's still better than the score of 36 in 2008, though, which suggests execs don't anticipate a repeat of the 2009 downturn.

Despite the general malaise, the semi execs polled do think the US is strengthening its position in the global semiconductor ecosystem. Fifty percent see the US as an important market for revenue growth, a number that has continued to climb (China is first at 60%, Japan is third at 37%). Three years ago the US was seen as fourth behind China (79%), Taiwan (44%), and Japan (40%). China's still clearly seen as a crucial growth market for semiconductors, though its numbers might have slipped a bit due to government tightening of lending, noted Ron Steger, partner in charge of KPMG's Global Semiconductor Practice.

The survey also shows, not surprisingly, the rising importance of wireless devices -- semiconductor suppliers see it as their top driver of 2012 revenue growth, followed by computing and consumer products. Promise is also seen in emerging markets for alternative/renewable energy (solar, thermal, battery technologies) and medical applications.