A survey of 94 semiconductor industry executives by KPMG found that the growth of capital expenditures and R&D spending by the industry could slow this year. Seventy-five percent of the surveyed executives reported that R&D spending will grow in fiscal 2008, down from the 85% last year. R&D spending will increase by 6% or more next year according to 49% of respondents, compared to a 62% response rate last year. Capital expenditures are forecast to increase next year, according to 57% of those surveyed. However, last year, 72% thought they would increase. Likewise, 36% expect capital expenditures to grow 6% or more this year, down from the 53% who expected such growth last year. Reduced spending may be the result of uneven profitability. In forecasting profitability over the next five years, 33% of those surveyed expect flat profits, 27% expect increased profitability, while 26% expected volatility and 15% expect a decline. However, 99% of the executives surveyed expect semiconductor sales to increase next year and 60% forecasted increased merger and acquisition activity in the next five years.

Source: KPMG