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COVID-19 – Impact on ESDM and Global Semiconductor Industry

The impact of the COVID-19 is having a large impact on both people and companies. Starting from 2019, making the China epicenter, business and manufacturing hub for the semiconductor of the world stall. The impact is so severe that there is a complete lockdown across many countries across the globe.

Though the complete outbreak of COVID-19 is still not known, but certainly the impact across the electronics value chain, from materials to final products, will likely be far-reaching—and hard-hitting on those parties involved with semiconductor manufacturing.

Chains

Source: Deloitte

In the near-term, semiconductor manufacturers need to implement their business continuity plans. They should try to ensure “business as usual” continues as much as possible. The unexpected appearance of COVID-19 serves as a reminder for companies to revisit and refresh all existing continuity and safety plans to help ensure every possible angle is covered. Tactical Operational Managerial Representative actions firms could take may include.

According to IDC, Impact of COVID-19 on the global semiconductor market will be impulsive. 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.
Mapping Four Semiconductor Revenue Forecast Scenarios
2020 Worldwide Semiconductor Revenue Growth Forecast ScenariosTechnology Supply Chain RecoveryGlobal Disruption to Economy and Technology DemandImpact on Broader Technology Industry & Initiatives
Scenario 1: Decline -12% or more1-3 months9-12+ months9-12+ months
Scenario 2: Decline -3 to -6%3-9 months3-9 months3-9 months
Scenario 3: Growth +2%1-3 months3-9 months3-9 months
Scenario 4: Growth +6% or more1-3 months1-3 months1-3 months
Source: IDC, March 2020

At this time, IDC believes the most likely outcome 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 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 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.

Long-Term Implications

In the longer race, semiconductor companies should consider examining their supply chain strategy and operating model to address the risks of geographical concentration and lack of resiliency. Many companies have geographically concentrated manufacturing to realize the benefits of low-cost labor, favorable tax structures, and synergies with both suppliers and customers.

Samsung Gets Profit-Stall

Samsung said its quarterly profits will come in at their lowest level in five years as the coronavirus pandemic continues to wreak havoc across the global economy. The South Korean conglomerate expects operating profit to come in at around 6.5 trillion won (£4.15 billion) for the opening three months of the year.

The article is a curation of reports and study from leading research and analyst companies. All the above reports mentioned comprise hyperlinks to assert their real resource. The content has been edited according to BISinfotech edit guidelines and also has editor’s perspective.

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Niloy Banerjee

A generic movie-buff, passionate and professional with print journalism, serving editorial verticals on Technical and B2B segments, crude rover and writer on business happenings, spare time playing physical and digital forms of games; a love with philosophy is perennial as trying to archive pebbles from the ocean of literature. Lastly, a connoisseur in making and eating palatable cuisines.

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