COVID-19 to have significant effect on the semiconductor marketWednesday, March 18th, 2020
COVID-19 To Have Significant Effect on Worldwide Semiconductor Market in 2020, According to IDC
- IDC report analyzes range of critical factors that will affect the semiconductor market this year and presents most likely scenario to help clients navigate this emergency
SAN MATEO, Calif. — The Coronavirus Disease 2019 (COVID-19) is affecting China and is 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 new International Data Corporation (IDC) report, Impact of COVID-19 on the Worldwide Semiconductor Market Forecast (IDC #US46115520), provides IDC’s view on the impact the COVID-19 virus will have on the semiconductor market.
The 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.
Mapping Four Semiconductor Revenue Forecast Scenarios
2020 Worldwide Semiconductor Technology Global Disruption to Impact on Broader Revenue Growth Forecast Supply Chain Economy and Technology Industry Scenarios Recovery Technology Demand & 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
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.
About IDC Enabling Technologies and Semiconductors Research
IDC’s Enabling Technologies Research covers the technologies that transform data from the physical world to the digital world within electronics systems and deployment across the landscape of systems from the Internet’s edge to the datacenter.