Jobless recovery for semiconductors (ST 22 Dec)

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HYNIX/

THE outlook for the underperforming semiconductor industry is looking up for next year, but the turnaround is unlikely to generate much hiring.

Top industry executives from around the world told a survey team that they expect ‘a relatively jobless recovery’ that will not ‘reflect any meaningful additions to the semiconductor workforce in 2010′.

There will be some recruiting – 66 per cent of executives polled anticipate their company’s global workforce to grow over the next 12 months – but the expansion will be fairly anaemic.

About 16 per cent expect to increase hiring by more than 10 per cent, but 43 per cent reckon staff numbers will lift by just 1 to 5 per cent, while 16 per cent fear numbers could contract.

About 113 senior executives from top global semiconductor companies were polled in the annual outlook survey conducted by KPMG International and the Semiconductor Industry Association. While they found only muted optimism on jobs, the results are still a marked improvement from last year.

Back then, 54 per cent of executives surveyed expected a decrease in their workforce, while only 29 per cent tipped an increase in hiring.

Mr David Leaver, audit partner, KPMG Singapore, said of this year’s results: ‘It is not completely clear why the employment outlook for 2010 is so much worse than the short-term revenue growth prospects, particularly given the level of job cuts in the industry last year.

‘However, it possibly reflects the continuing uncertainty in the sustainability and shape of the recovery.’

Mr George Scalise, president of the Semiconductor Industry Association, added: ‘The fortunes of the global microelectronics industry are increasingly tied to the overall worldwide economy.

‘While we appear to be in the early stages of a broad-based recovery, uncertainty about many critical issues will weigh heavily on decision-makers.’

If the jobs forecast is gloomy, overall expectations for the semiconductor industry appear dramatically healthier compared with last year.

A confidence index compiled by KPMG jumped from 36 last year to 61. ‘Our findings reflect a confidence not seen since 2007,’ said Mr Leaver.

Respondents were bullish about increasing revenue, with 54 per cent expecting turnover to increase by 10 per cent or more in the next fiscal year. Only 18 per cent felt that way a year ago.

The survey, now in its fifth year, also found strong interest in energy-efficient or energy-renewable technology, with 66 per cent of the executives indicating a high or extremely high level of customer interest in such products.

Profitability, research and development, and capital expenditure are all expected to increase, but at a less robust rate than revenue.

‘The Asian region continues to be viewed as the most important for recovery and revenue growth in the next three years for the semiconductor industry,’ said Mr Leaver.

‘However, industry executives still see some volatility in the markets.’

China was identified as the most important market for revenue growth followed by the United States and Taiwan.

sylviap@sph.com.sg