The majority of global semiconductor businesses are still operating with “questionable” risk management strategies, with just 29% reporting supply chain risk management as embedded in strategic planning, capital allocation and other business processes, according to a new report.

While three quarters of the respondents to WTW’s Global Semiconductor Industry Survey claim to have a formal approach to business continuity, only 39% said that it is linked to KPIs.

Despite this, the report’s authors suggest the semiconductor industry is on the path for growth, with 70% of those surveyed anticipating higher than expected profitability over the next two years. (APAC 78%, EMEA 65%, NA 64%).

Addressing ESG is a strategic objective for 52% of survey respondents globally, 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 is a risk to their future success. However, only 44% said they have a formal process in place for managing ESG risks, and one that is measured and evolves.

During the pandemic, 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 industry, however.


Further report findings (Source: WTW)

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%).

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%).

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.

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