Artificial Intelligence (AI), cloud computing and internet of things (IoT) will significantly drive the growth of semiconductor industry in 2018, as per a report by KPMG LLP.
KPMG LLP, the audit, tax and advisory firm, surveyed around 150 leaders from the semiconductor industry, and found that they’re more optimistic this year for revenue growth and profitability, as compared to the last year.
Two-third of the respondents cited IoT as one of the top revenue drivers in 2018, second to only wireless communications. IoT’s revenue prospects were up 56% from last year, with it comprising the data devices like personal wearables, smart cities, smart homes, etc.
“The increasing demand for IoT, AI and cloud applications is driven by their individual value and their value to each other. Cloud infrastructure is critical to enabling AI and capturing IoT-produced data. AI will enable better analysis and use of the data,” said Lincoln Clark, KPMG Global Semiconductor Industry Leader. “Though the number one revenue driver remains wireless applications, its importance fell slightly in 2018 though we do anticipate growth as 5G begins to rollout in future periods.”
Cloud and AI jumped into the top-10 list, both of which were equally cited by 43% respondents. Last year, cloud and AI were cited by 27% and 18% respondents, respectively.
75% respondents cited wireless applications as the top revenue driver for the semiconductor industry, which was cited by 84% respondents last year. However, wireless communication witnessed a slight fall in 2018, but its dominance is expected to continue due to the anticipated arrival of 5G networks in the months ahead.
The semiconductor industry leaders listed ‘diversifying into new business areas’ as their top priority over the next three years, which was followed by M&A and joint ventures, talent development, and implementing disruptive technology.
The respondents also cited ‘minimizing cyber security’ as one of their top 10 priorities. KPMG said that it would have found a position among the top 5 if the survey was conducted after the exposure of Meltdown and Spectre vulnerabilities, which affected every computer and device in early January this year.
According to the survey, the US, China, Europe, Taiwan and Japan will be the top countries to drive semiconductor revenue over the next three years. While Taiwan and Japan were cited by more respondents this year, as compared to the last year, the US, China and Europe dipped in importance.