Jason Lomberg, North American Editor, PSD
We’re 6-8 months into a global pandemic – depending on how (and where) you track its origins – and it’s worth taking a gander at COVID-19’s impact on the semiconductor industry.
First off, we’ve been extremely lucky – and not just your humble editors at Power Systems Design. The coronavirus hit the world quickly, but because our industry isn’t always public-facing, it hasn’t chafed as badly as others with the populace sheltering-in-place.
Early on in the pandemic, the Semiconductor Industry Association (the “Voice of the U.S. Semiconductor Industry”) sent a letter to President Trump urging him to classify our industry as “essential infrastructure” and/or “essential business.”
In crafting the public health measures we’re all intimately familiar with now, “it is imperative,” said the SIA, that “these directives provide exceptions for industry operations that are critical to our economy and national defense, such as the semiconductor industry.”
As a result, semiconductor companies across the U.S. and most of the Western world were deemed essential and remained open, even if it meant a change in venue. And my informal discussions with key decision makers across our industry confirmed that – day-to-day operations adjusted to the new normal, but business remained steady.
Of course, it’s foolish to overlook the negative repercussions of a global health crisis that’s shut the world down and killed nearly 800,000 people (or more, depending on when you read this).
Manufacturing in China – where the coronavirus presumably began – was obliterated, and since the global supply chain is so dependent on China, well…you can fill in the blanks. According to one survey, over 60% of companies experienced some form of supply chain shortages.
Meanwhile, unemployment claims in the U.S. have reached record highs – they just recently dipped below a million in August – and at least some of those come from our industry. The SIA’s survey of member companies revealed comprehensive health measures, including strict controls on travel and movement of employees between facilities, reducing on-site workforce, quarantines for employees who traveled abroad or showed cold/flu symptoms, and a lot more, but it’s impossible to escape even the tertiary effects of COVID-19.
Wakefield Research forecasts a 5-20% drop in revenue for the larger semiconductor industry in 2020, but it also predicts a quick recovery, especially with some companies pivoting towards the healthcare market and remote work, homeschooling, and contactless solutions driving demand for wire communication and touchscreens.
McKinsey & Company predicts two scenarios, one more optimistic than the other. In the first, global GDP recovers in the fourth quarter of 2020 and semiconductor demand in a few segments recovers to pre-COVID-19 levels by 2021. In the less optimistic outlook, demand in most segments doesn’t return to normal next year. Both scenarios, unfortunately, assume a negative year-on-year revenue growth in 2020.
So we’re in store for a little misery – not unlike the rest of the world – but it seems we’ll be amongst the first to recover.
Stay safe and healthy out there!