COVID-19 set to have significant effect on the semiconductor market

COVID-19 impact on semiconductor market

The Coronavirus Disease 2019 (COVID-19) is affecting China and is quickly spreading within East Asia and into Europe and North America. In addition to the human cost of life, the impact of the spread of the virus on the global economy is only beginning to be appreciated and has deep implications for the world’s technology supply chain. A report from the International Data Corporation (IDC), Impact of COVID-19 on the Worldwide Semiconductor Market Forecast (IDC #US46115520), highlights IDC’s view on the impact the COVID-19 virus will have on the semiconductor market.

The IDC report provides a framework to evaluate the market impact through four scenarios that assess the range of possible outcomes. Each scenario is based on varying assumptions and severity of the impact to business for technology suppliers. For each scenario, a range of critical factors are assessed with a resulting updated forecast, presented with leading indicators to help clients navigate this emergency.

“The emergence of COVID-19 has brought with it travel bans and quarantines; massive slowing of the supply chain; uncertainty in the stock market; falling business confidence, and growing panic among the population,” said Mario Morales, program vice president, Semiconductors and Enabling Technologies at IDC. “Despite the growing uncertainty and panic, technology suppliers must continue to focus on their long-term investments, maintain engagement with partners and prospects, and look to specific markets for stability. Emerging technologies like 5G, the Internet of Things, high-performance computing, and intelligent edge will be fundamental to an overall recovery by the technology sector.”

Report highlights include:

  • There is nearly an 80% chance for significant contraction in worldwide semiconductor revenues in 2020, instead of a previously expected minor overall growth of 2%.
  • There is still a one-in-five chance that a fast, strong bounce back from COVID-19 in 2020 is possible.
  • On a global level, the COVID-19 crisis is just beginning, with too many variables to immediately craft a single forecast in response.
  • The impact to technology supply chains in China are significant, but the timing of the recovery is uncertain.
2020 Worldwide Semiconductor Revenue Growth Forecast Scenarios  Technology Supply Chain Recovery Global Disruption to Economy and Technology Demand Impact on Broader Industry & Initiatives 
Scenario 1: Decline -12% or more 1-3 months 9-12+ months  9-12+ months
Scenario 2: Decline -3 to -6% 3-9 months 3-9 months 3-9 months
Scenario 3: Growth +2% 1-3 months 3-9 months 3-9 months
Scenario 4: Growth +6% or more 1-3 months  1-3 months 1-3 months 

Source: IDC, March 2020
Currently, IDC believes the most likely result for this event will be a year-over-year revenue growth rate of -6% for the worldwide semiconductor market in 2020. We give this scenario a 54% probability. Under this scenario, the supply chain will start to recover, and quarantines and travel bans will likely ease, over the summer. For the worldwide semiconductor market, the impact will be $25.8 billion. While the impact of the virus will be felt through the bulk of the year, the accumulated knowledge about the virus, public health initiatives, and other efforts will to some degree mitigate the harm done by COVID-19. In the short term, there will be lower demand for systems and some impact to component availability, but as recovery sets in, growth will return to the market.

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Source: Digital TV News



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