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COVID-19 will significantly disrupt the semiconductor market in 2020

19 March 2020
Four scenarios of the potential impacts COVID-19 may have on the semiconductor industry in 2020. Source: IDC

The global impact of the coronavirus disease 2019 (COVID-19) is likely only beginning and will significantly affect the semiconductor market negatively in 2020, according to a new market forecast from International Data Corp (IDC).

The report indicates that there is nearly an 80% chance for significant contraction in worldwide semiconductor revenues in 2020, a substantial change from a previously forecasted overall growth of 2%. IDC forecasts that there is still a one-in-five chance of a strong bounce back from COVID-19 in 2020, but currently there are too many variables to craft a single forecast in response. Additionally, the timing of a recovery in China’s technology supply chain is uncertain, leading to further complications.

"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."

IDC forecasts four semiconductor scenarios that will likely happen in 2020 as a result of COVID-19. A very pessimistic one with a decline of 12% or more; a decline of 3% to 6%; a more optimistic growth scenario of 2%; and a significant growth scenario of 6% or more.

Of these scenarios, IDC believes the most likely outcome will be a year-over-year revenue growth rate of -6% from the worldwide semiconductor market in 2020. IDC gives this scenario a 54% probability, where under the scenario the supply chain will start to recover and quarantines and travel bans will ease, over the summer.

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. Longer-term, the effect of COVID-19 will be felt throughout the year with some degree of harm done by the virus.

Learn more about IDC’s research into COVID-19 with its Impact of COVID-19 on the Worldwide Semiconductor Market Forecast.

To contact the author of this article, email PBrown@globalspec.com

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