The semiconductor industry serves as a key driver in the global economy and the ramifications of the supply chain crisis, exacerbated by the conflict in Ukraine, have been heavily reported on...
WTW recently surveyed 250 senior decision makers in leading semiconductor companies for the Global Semiconductor Industry Survey, to ascertain how the industry is responding to global trends and challenges and to detail the biggest opportunities and risks for business over the coming years.
Key findings include:
- Focus on recovery: It’s predicted that the semiconductor industry will grow. 70% of those surveyed anticipate higher than expected profitability over the next two years. (APAC 78%, EMEA 65%, NA 64%).
- ESG in the mainstream: No longer a buzzword, addressing ESG regulatory and investment community requirements is a strategic objective (52%), especially among those in finance, compliance, and board level roles (56%). Overall, a third (32%) rank ESG pressures in the top five losses to the business in the past two years, with 34% recognising that ESG pressures is a risk to their future success. However, only 44% said they have a formal process in place for managing ESG risk, which is measured and evolves.
- Post-pandemic outlook: The semiconductor industry was hit by the new ways of working and changes in demand trends, which saw the need to innovate quickly (29%); increased digitalisation (26%) and transformation; growth of niche areas (26%) and responding to rapidly changing consumer demands (24%). Very few consider the long-term impacts of Covid-19 as negative for the business.
- Emerging technologies: Senior leaders see the greatest opportunities in increased production for emerging technologies (50%); a refocus on production, towards more higher demand type semiconductors, driving transformative technologies (50%), and the role of semiconductors in helping to solve climate change challenges (44%). For those in risk roles the focus is on increasing the production of chips in new/emerging technologies (59%).
- Predictions of risk: Internal factors seem to be linked to where the biggest losses have been seen over the past two years, as well as anticipating increase in other risk areas. The pandemic meant businesses were exposed, and had to adjust quickly, to different supply chain risks and changing demands. Internally, complex changing technology end-product requirements (43%), intellectual property infringement (42%) and supply chain and infrastructure (40%) were the biggest loss areas and are anticipated to be the biggest risk factors to success over the next three to five years. Externally, as well as ESG pressures (3%), risk is also anticipated from the environment (30%) and changing consumer demand (33%). For those in security/risk roles, they also anticipate risk in exporting (37%). In APAC political risks are ranked higher (44%) than those in EMEA (19%) and NA (23%).
- Risk management: Risk management strategies are questionable for some businesses. Only 29% said that supply chain risk management is embedded in strategic planning, capital allocation and other business processes. 24% said the same for intellectual property, and only 18% for environmental. While three quarters (76%) claim to have a formal approach to business continuity, only 39% said that it is linked to the business KPIs.
- Sufficient cover: While 46% said they have cover that ensures extreme weather in the supply chain would not have a serious impact on the business, more than half (51%) indicated that they have some cover but are unsure if it is sufficient. In APAC and the US, where extreme weather has historically impacted semiconductor manufacturers, 67% and 41% respectively admit they are unsure if the cover the business has is sufficient.
Please find the link to the full report here - https://www.wtwco.com/en-GB/Insights/2022/07/global-semiconductor-industry-survey-report
