KPMG Semiconductor Executive Briefing. March 13, 2013

Transcription

1 KPMG Semiconductor Executive Briefing March 13, 2013

2 With you today Gary Matuszak Global Chairman Technology, Media & Telecommunications Ron Steger Partner in Charge KPMG s Global Semiconductor Practice 1

3 Agenda 8:30 a.m. to 8:40 a.m. Welcome and Opening Remarks 8:40 a.m. to 9:20 a.m. KPMG Global Semiconductor Survey: A more optimistic outlook for 2013 Current Status of the Semiconductor Industry 9:20 a.m. to 9:30 a.m. Q&A 2

4 Administrative CPE regulations require that online participants take part in online questions - Must respond to a minimum of four questions per 50 minutes - Polling questions will appear on your media player - Results will be reviewed in the aggregate; no responses will be tracked back to any individual or organization - Do not view the presentation on slide show mode polling questions will not appear To ask a question, use the Ask A Question icon on your media player Help Desk: or outside the United States at

5 Contents Objectives and methodology Executive summary Semiconductor industry business confidence index Key findings Demographics Current Status of the Semiconductor Industry 4

6 Objectives and methodology

7 Objectives and methodology Objectives Identify current and future trends and issues in the global semiconductor industry: Produce a multiyear index to measure and track executives confidence in the industry New survey areas for 2012 include: Mobile payment methods Semiconductor revenue in the automotive sector. Methodology Web-based survey conducted in September October 2012 by Forbes Insights on behalf of KPMG Total 2012 respondents: : 155 Good representation of respondents by location, revenue, title, function, and company type Company headquarters location Company size by revenue U.S. 54% 55% ASPAC 24% 35% Europe/Other 22% 10% US$1 billion or more 49% 49% Less than US$1 billion 51% 51% 6

8 Executive summary

9 Executive summary Current KPMG Semiconductor Business Confidence Index is 57: Up from 46 last year, but still lower than its peak of 64 in 2009 Similarly, executives in the semiconductor industry see their company s revenue and profitability growing in the next fiscal year, but the magnitude of their optimism is lower than in previous years: Greater optimism when looking three years ahead Top application markets expected to drive semiconductor revenue remain the same as in previous years: consumer, wireless handsets/mobile technologies, and computing: And additional application markets are expected to grow in importance as revenue drivers: Industrial Power Management (battery technology) Automotive 8

10 Executive summary (continued) U.S. and China continue to be seen as most important geographies for revenue growth three years from today: U.S. is trending up in importance while China and Taiwan are declining. R&D spending expected to increase significantly in 2013 Global semiconductor workforce seen expanding: China and United States still seen as top markets for headcount growth. Growth in United States is increasing while China is decreasing. Given the high cost of equipping a 450mm wafer fab, executives expect the industry to remain at 300mm, but expect the transition to occur by 2016: Production of 450mm wafers is expected to have a greater impact on the semiconductor industry than production at a sub 20mm technology node. 9

11 Executive summary (continued) Mobile payments is seen as the predominant payment method within two years: Led by contactless card systems NFC and RFID most often selected as best mobile payment platforms, but the cloud storage method is expected to gain economies of scale before NFC. Expectations for global M&A activity are up from last year: The number of acquisitions/divestitures in 2013 is expected to be higher than 2012 expectations, with active companies likely to make 1 or 2 acquisitions/divestitures. 10

12 Semiconductor industry confidence index

13 Semiconductor industry business confidence index: Negative Positive An index value of 50 indicates a neutral perception about the industry and its prospects. Index values above/below 50 indicate a positive/negative perception. Revenue growth in the primary application market is not included in the 2009, 2010, 2011, and 2012 index calculation; however, the overall component of revenue growth included in the index is weighted proportionally the same as in previous survey years. 12

14 Semiconductor industry confidence and its components: Semiconductor Business Confidence Index Semiconductor Revenue Growth Capital Spending Change Global Workforce Change R&D Spending Change Profitability Change Negative Positive An index value of 50 indicates a neutral perception about the industry and its prospects. Index values above/below 50 indicate a positive/negative perception. Revenue growth in the primary application market and Change in profitability for company are not included in the and 2007 index calculation, respectively. 13

15 Key findings

16 Key findings Up significantly from 2011, three-quarters of executives expect their company s semiconductor revenue growth to increase in the next fiscal year, but does not match optimism seen in 2010 and 2009 (90% and 92%, respectively): 16%: No change 9%: Decrease One-quarter expect their company s semiconductor revenue growth to increase by more than 10%. Most (83%) executives say their company s semiconductor revenue growth will increase over the next three years: 11%: No change 6%: Decrease Many (71%) say the annual profitability of the global semiconductor industry is expected to increase over the next year, up significantly from 2011 (60%): 14%: No change 16%: Decrease Over 1 in 5 expect gains greater than 10%. Most (80%) continue to expect the annual profitability of the global semiconductor industry to also increase over the next three years: 14%: No change 6%: Decrease Semiconductor executives see their company s revenue and profitability growing in the next fiscal year, but the magnitude of their optimism is lower than in previous years Greater optimism when looking three years ahead 15

17 Key findings (continued) Consumer (64%), wireless handsets/mobile technologies (63%), and computing (59%) application markets remain the most important semiconductor revenue drivers over the next year Additional application markets also seen driving revenue growth. Application Markets % (4 5) Mean % (4 5) Mean % (4 5) Mean % (4 5) Mean Consumer 64% % % % 3.9 Wireless handsets and other wireless communications (mobile technology) 63% % % % 4.2 Computing 59% % % % 3.5 Industrial 56% % % % 3.1 Medical 50% % % % 2.5 Alternative/renewable energy (i.e., solar, thermal, battery technologies) 47% % % % 2.8 Automotive 46% % % % 2.9 Wireline communications 41% % % % 3.0 Top application markets expected to drive semiconductor revenue remain the same: consumer, wireless handsets/mobile technologies, and computing. Additional application markets are expected to grow in importance as revenue drivers: industrial, medical, power management (battery technology), and automotive. 1 = Not at all important and 5 = Very important 16

18 Key findings (continued) Similarly, over the next three years, wireless handsets/mobile technology (64%), computing (59%), and consumer (56%) application markets also continue to be seen as the most important semiconductor revenue drivers: Additional application markets also seen driving future revenue growth. Application Markets Wireless handsets and other wireless communications (mobile technology) % (4 5) Mean % (4 5) Mean % (4 5) Mean % (4 5) Mean 64% % % % 4.2 Computing 59% % % % 3.5 Consumer 56% % % % 3.9 Industrial 57% % % % 3.1 Medical 55% % % % 2.8 Alternative/renewable energy (i.e., solar, thermal, battery technologies) 53% % % % 3.0 Automotive 47% % % % 3.1 Wireline communications 41% % % % 2.9 Same application markets are seen driving semiconductor revenue over the next three years. Additional application markets are also seen driving future revenue growth: industrial, medical, power management (battery technology), and automotive. 1 = Not at all important and 5 = Very important 17

19 Key findings (continued) Half continue to say the United States and China are most important geographies for semiconductor revenue growth three years from today. U.S. is maintaining importance (50%), while China declining (46% from 60%). Many expect their company s semiconductor-related capital spending (including equipment and software) to increase for the next fiscal year. Many (77%) also expect semiconductor-related R&D spending to increase in the next fiscal year vs. current year, up significantly from 2011 (65%). Two-thirds expect their company s global semiconductor workforce to expand during the next fiscal year, up significantly vs (48%). 1 in 5 see expansion greater than 10%. China (59%) and United States (50%) continue to be seen as the top markets for headcount growth in the semiconductor industry during the next 12 months. The United States and China continue to be seen as most important geographies for revenue growth three years from today R&D spending expected to increase significantly Global semiconductor workforce seen expanding, China and U.S. still seen as top markets Given high cost of equipping a 450mm wafer fab, industry to currently remain at 300mm transition to occur by

20 Key findings (continued) Increased growth seen in the United States (44% to 50%) while growth in China is declining (59% from 70%). Almost half (45%) agree that given the high cost of equipping a 450mm wafer fab, the industry will remain at 300mm for the foreseeable future, up significantly vs (31%): 34%: Disagree (Moore s Law will have a major impact with 450mm wafers) Majority (54%) continue to say the transition to the 450mm wafer will occur between 2013 and 2016, mostly (43%). Contrary to 2011, nearly half now say 450mm wafer production will have more impact on the industry than production at a sub 20mm technology node. About 4 in 10 say the majority of their products are produced at the 65nm technology node; no change expected in three years. Production of 450mm wafers to have greater impact on the semiconductor industry than production at a sub 20nm technology node Mobile payments seen as the predominant payment method within two years, led by contactless card systems NFC and RFID most often selected as best mobile payment platforms, but cloud storage method seen gaining economies of scale before NFC 19

21 Key findings (continued) Over half (55%) say mobile payments will become the predominant method of payment within two years: Half say the Contactless card system will be the most utilized mobile payment method, followed by m- banking (36%) and m-wallet (30%). NFC (32%) and RFID (28%) technologies are expected to provide the best platforms for conducting mobile payments: 14%: Wireless Application Protocol (PayPal) 13%: Bluetooth Significant majority (61%) say the cloud storage method of mobile payment credentials will reach economies of scale before NFC (39%). Of several auto-related areas, one-quarter say body electronics (remote control, HVAC, etc.) will provide the most semiconductor revenue over the next three years: 20%: Communications convergence (transition smart phone to the car, etc.) 19%: Safety (lane departure warning, electronic stability control, etc.) 20

22 Key findings (continued) Similar to 2011, two-thirds say the expected rate of change in global M&A deals will increase, but still lower than 2010 (76%). The number of acquisitions in 2013 is expected to be slightly higher than what was expected for 2012: 44%: Expect to make 1 or 2 acquisitions (vs. 38%) 11%: Expect to make 3 or more acquisitions (vs. 8%) The number of divestitures in 2013 is also expected to be higher than what was expected for 2012: Expectations for global M&A activity are up from last year. The number of acquisitions/divestitures in 2013 is expected to be higher than what was expected for 2012, with active companies likely to make 1 or 2 acquisitions/divestitures. 38%: Expect to make 1 or 2 divestitures (22%) 7%: Expect to make 3 or more divestitures (8%) 21

23 Demographics

24 Job title 100% 80% 60% 40% 20% 28% 28% 25% 24% 20% 20% 13% 12% 26% 23% 15% 12% 11% 11% 11% 11% 8% 0% Director Other C Level President/CEO/Chairman Controller Vice President Other 0% May not equal 100% due to rounding 2012 (n = 152) 2011 (n = 155) 2010 (n = 114) Q. Which of the following best describes your job title? 23

25 Annual revenue 100% 80% 60% 40% 34% 26% 26% 20% 16% 16% 16% 17% 14% 9% 10% 8% 9% 14% 16% 14% 12% 13% 10% 10% 10% 4% 0% Less than $200M $200M $499M $500M $999M $1B $2.99B $3B $4.99B $5B $9.99B $10B or more May not equal 100% due to rounding 2012 (n = 152) 2011 (n = 154) 2010 (n = 109) Q. Which of the following best describes your company s annual revenue in 2011? 24

26 Current Status of the Semiconductor Industry Current Status: Ron Steger 25

27 Selected 2013 Semiconductor Growth Forecasts IDC 4.9% Wells Fargo 8-10% WSTS 4.5% Gartner 4.5% IDC 4.9% Oppenheimer 3% Future Horizons 8% IC Insights 3-7% 26

28 WSTS Semiconductor Forecast Source: WSTS Rebound anticipated in

29 Semiconductor Segment Data Segment CAGR % 13/12 Y/Y % Automotive 23,149 25,344 24,324 25,897 28,325 30,017 32,658 35,242 38,002 8% 6% Computer 93,269 86,897 79,501 82,494 88,268 95, , , ,243 8% 4% Consumer 58,024 53,664 54,177 57,661 63,621 69,515 75,041 80,553 86,382 8% 6% Wired 28,444 27,749 28,270 32,453 32,465 36,557 38,533 41,668 45,995 7% 15% Wireless 59,891 70,826 72,694 79,454 90, , , , ,378 11% 9% Industrial 35,544 35,043 33,224 35,082 37,475 39,336 43,384 45,216 48,012 6% 6% Total 298, , , , , , , , ,012 9% 7% Source: Databeans Databeans forecasts 9% CAGR for semiconductors 28

30 2012F Top 20 Semiconductor Sales Leaders Ranked by Growth Rate ($M, Including Foundries) 2012F Rank 2011 Rank Company Headquarters 2011 Total Semi 2012F Total Semi 2012/2011 % Change 1 1 Intel U.S. 49,697 49,370-1% 2 2 Samsung South Korea 33,483 30,425-9% 3 3 TSMC* Taiwan 14,600 17,022 17% 4 7 Qualcomm** U.S. 9,828 12,807 30% 5 4 TI U.S. 12,900 12,063-6% 6 5 Toshiba Japan 12,745 11,075-13% 7 6 Renesas Japan 10,653 9,839-8% 8 9 SK Hynix South Korea 9,403 8,802-6% 9 10 Micron U.S. 8,571 8,654 1% 10 8 ST Europe 9,631 8,384-13% Broadcom** U.S. 7,160 7,740 8% Sony Japan 6,093 6,245 2% AMD** U.S. 6,568 5,423-17% Infineon Europe 5,599 4,984-11% Global Foundries* U.S. 3,480 4,560 31% Fujitsu Japan 4,430 4,397-1% NXP Europe 4,147 4,300 4% Nvidia** U.S. 3,939 4,274 9% Freescale U.S. 4,391 3,787-14% UMC* Taiwan 3,760 3,734-1% Top 10 Total 171, ,441-2% Top 20 Total 221, ,885-1% * Foundry. ** Fabless. Foundries and Fabless dominate Top 5 growth rates: IDM s dominate 5 highest rates of decline Source: IC Insights Strategic Reviews Database. 29

31 Inventory at Semi Customers, Excluding PCs Source: Company data, Goldman Sachs Research calculations Inventory is on track to be about 10% below peak levels in 4Q12E 30

32 Top IC Foundries Source: IC Insights, company reports *Hua Hong NEC and Grace merged in 2012 (includes Shanghai Huali joint venture) **GaAs foundry GlobalFoundries & Samsung both surpass UMC in

33 Capacity (Wafer Starts per Month, WSPM) vs. Semi Unit Shipments Source: Gartner, SIA, Goldman Sachs Research estimates Capacity growth has outstripped semi industry shipments 32

34 Cost per Million Gates ($) IBS Calculation of Cost per Transistor by Node WRONG TREND nm Source: IBS 65nm 40nm 28nm 20nm 14nm Incurred cost/transition at 20 & 14 nanometers may mean the end of Moore s Law 33

35 Questions & Answers Thank You