Donald Trump

The semiconductor industry is poised for a good 2025, but geopolitical tensions and trade restrictions are seen offsetting further growth, according to a recent KPMG study. 
According to a KPMG 20th annual Global Semiconductor Outlook report by the US audit, tax, and advisory firm, as well as the Global Semiconductor Alliance (GSA), executives in the sector are generally optimistic about <a href="https://venturebeat.com/ai/geopolitics-and-ai-will-affect-the-chip-industry-in-2025-kpmg/" rel="nofollow noopener" target="_blank">achieving overall growth in 2025</a>. The executives are also aware of the headwinds ahead in the next two to three years, which require adaptation strategies. 
<h3 id="kpmg-projects-a-challenging-2025">KPMG projects a challenging 2025</h3> 
The report shows that about 92% of the semiconductor executives who were interviewed during the survey are upbeat about their 2025 prospects. Bright prospects are anchored on the prevailing strong demand for chips for the AI industry, cloud computing, data centers, wireless communication, and automotive applications according to data from the KPMG and GSA. 
This also comes as the KMPG Semiconductor Industry Confidence Index improved to 59 compared to 54 recorded in 2023, another indicator of optimism and confidence in the industry. According to the <a href="https://venturebeat.com/ai/automotive-will-continue-to-drive-demand-for-semiconductor-chips-kpmg/" rel="nofollow noopener" target="_blank">report</a>, a value above 50 reflects a more positive outlook than a negative one. 
This also shows confidence across factors such as revenue growth, growth in profitability, workplace growth research and development spending as well as capital expenditure. 
“AI underpins the industry’s near-term growth and revenue expectations,” said KPMG technology media &amp; telecommunications leader Mark Gibson, in a statement. 
<blockquote>
 “The upward trajectory for the industry in the short-term is clear, but the companies that can manage their supply chains and attract and retain talent will be the ones well-positioned to sustain and benefit from the AI boom.” 
 Gibson.
</blockquote> 
However, it is not going to be all rosy for the sector. The interviewed executives are also anticipating 2025 to be a challenging year due to geo-political territorialism such as tariffs and trade restrictions. US President-elect Donald Trump has revealed plans to impose <a href="https://itif.org/publications/2024/12/10/chipping-away-at-competitiveness-why-tariffs-won-t-save-u-s-semiconductor-manufacturing/" rel="nofollow noopener" target="_blank">tariffs</a> on his first day in office in January. 
According to the report, executives in the semiconductor industry who were interviewed view armed conflicts and tariffs as the most concerning geopolitical challenges that could hamper the industry’s ecosystem in the next two years. 
They also highlighted government subsidies and the nationalization of semiconductor technology among the top problems expected in the next few years. 
<h3 id="the-sector-will-require-adaptive-strategies-kpmg">The sector will require adaptive strategies: KPMG</h3> 
Faced with such challenges, the report suggests strengthening supply chain resilience and flexibility, together with talent development and retention will be critical as demand for chips continues to rise. 
According to the KPMG report, businesses in the semiconductor industry will need adaptive strategies to navigate the complex environment. In response to the anticipated challenges, the leaders in the semiconductor industry are increasing geographic diversity to enhance supply chain resiliency. 
These have highlighted that making the supply chain more flexible and adaptive to geopolitical changes should be a top strategic priority. 
The executives are also on the lookout for disruption as non-traditional semiconductor companies (tech giants platform companies, and automotive companies) shape their place in the industry. 
“Tech giants and established semiconductor players are starting to battle for market share, with ongoing technical developments and optimization of chips for AI aiming to enhance and provide alternatives for AI training and inferencing capabilities,” said KPMG global semiconductor leader Lincoln Clark, in a statement. 
<blockquote>
 “As the industry becomes more competitive, significant investments and cutting-edge strategies will be essential for companies to not only survive but thrive in this rapidly evolving landscape.” 
 Clark.
</blockquote> 
According to <a href="https://venturebeat.com/ai/geopolitics-and-ai-will-affect-the-chip-industry-in-2025-kpmg/" rel="nofollow noopener" target="_blank">VB</a>, the Global Semiconductor Industry Outlook report will be available early next year. The report captures insights from 156 semiconductor executives with more than 50% of them coming from firms with $1 billion or more in annual revenue. The survey also had mid-size companies – with an annual revenue of between $100 million to $999 million as well as small businesses that make less than $100 million in annual revenue. 
The executives are upbeat their businesses will grow in revenue and a third of the executives projecting revenue growth by at least 10%. 
Most of the executives – 86% – strongly believe their businesses will grow with almost half expecting that growth to exceed 10%. Almost all the executives (92% are positive about overall industry growth, projecting total revenue for the sector to grow by more than 10%. 
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Geopolitics to weigh on semiconductor industry in 2025: KPMG survey

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