COVID-19 Impact on Semiconductors and Electronics Industry: Meticulous Research® Viewpoint

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London, May 11, 2020 (GLOBE NEWSWIRE) -- In 2020, the world faces a severe and acute public health emergency due to the Coronavirus disease (COVID-19) global pandemic. The current crisis has highlighted the potential risks and susceptibility of today’s electronics and semiconductor value chain, consequently challenging the companies operating in semiconductor and electronics industry to consider transforming its global supply chain model. The semiconductor and electronics industry has already suffered considerable losses owing to COVID-19 in the first quarter of 2020. However, the industry is determined to bounce back strongly and the average industry growth will be expected in the second half of this year.

In Q1 2020, The World Health Organization (WHO) declared COVID-19 (coronavirus) to be a global pandemic. The Coronavirus disease (COVID-19) has spread worldwide across more than 190 countries, with the majority of countries reporting cases. This has affected the global economy on a large scale, creating serious challenges to mitigate the economic impact of this human tragedy and sustain businesses through 2020 & 2021. The semiconductor and electronics industry is among the severely hit industries owing to its dependence on the severely hit China and other Asian markets. Some of the segments in this industry are at high risk such as consumer electronics, and automotive among others while other segments remain healthy including cloud-computing data centers, communication & connectivity technology, and healthcare.

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According to a recent survey conducted by Electronics Components Industry Association (ECIA), there is a large shift towards ‘no impact’ & ‘minimal impact’ in all components segments and expects no disruption in the supply chain. Also, slowdown in the end-market demand is lowering pressure on the electronics components supply chain, while this industry is facing a challenge of balancing supply and demand environment. Leading players in this industry are focusing more on their production and delivery strategy. For instance, Intel Corporation, the world’s biggest chipmaker has planned to maintain over 90% on-time delivery of its products from its factories across the globe. Besides, Qualcomm Technologies, Inc., a wholly-owned subsidiary of Qualcomm Incorporated is anticipating overall market share gains in second-half of 2020, owing to expected increase in shipments from leading Android OEMs as 5G technology providers during post virus rebound.

In Europe, as the situation of COVID-19 (Coronavirus disease) pandemic has worsened in most countries including Italy, Spain, France, Germany, and the U.K. among others, semiconductor manufacturers have to look after the health concerns and risk factors for their workers. On March 17, 2020, France imposed strict COVID-19 containment rules, pushing companies to embrace remote working and take necessary measures for the health and safety of employees. In stipulation of this, STMicroelectronics, a leading integrated device manufacturer adjusted its front-end and back-end manufacturing operations at its French plants with 50% reduction in the manufacturing staff.

In a post Coronavirus disease (COVID-19) business environment, it is imminent for semiconductor and electronics industry to address challenges with geographically concentrated manufacturing and supply chain model that the industry has been following for decades. Semiconductor companies can proactively look to shift or share existing manufacturing capacities with more flexible agile supply node network model, which allows multi-trails to reduce the risk of single-point failure. This model also provides regional scale, where companies can extend rigorous capabilities to near-region and qualify alternate sources of supply as well as ensure that adequate capacity is stored in-country, while other connected regional nodes are also built out. Several semiconductor and electronics companies are eying this crisis as new opportunity to rethink and restructure their existing strategies as well as open a window for semiconductor manufacturers and suppliers to collaborate and establish more agile semiconductor supply networks that can help create a more flexible future. Several semiconductor and electronics companies are now shifting their focus from China to India and other developing countries. According to a report published by The Economic Times on April 27, 2020, around 200 companies in the U.S. are planning to move their manufacturing base from China to India post the general elections. Many such reforms are expected to take place in coming years.

The current COVID-19 pandemic is bound to leave a serious impact on the demand for semiconductor devices. However, favorable government policy and initiatives including reduction and ease in interest rate, tax exemptions, and number of financial packages, automation in manufacturing, and growing demand of medical devices during this health emergency, and recovery of the manufacturing in China are showing some positive signs. Several semiconductor associations, such as Semiconductor Industry Association (SIA) have asked government authorities to specify semiconductor industry operations as Essential Infrastructure or Essential Business and allow continuity in operations of an industry to combat with the COVID-19 pandemic.

Amidst this crisis for the semiconductor industry, Meticulous Research® is continuously assessing the impact of COVID-19 pandemic on various sub-markets, and enable global organizations to strategize for the post-COVID-19 world and sustain their growth.

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