COVID-19 will put 2020 semi sector recovery at risk

The semiconductor sector spent most of 2019 coming to terms with the uncertainty of a US-China trade war. It will now spend the rest of 2020 reasoning what the fallout from the coronavirus (COVID-19) means for global economic growth and subsequent demand for the semiconductors that power products such as smartphones and laptops. Even at this early stage in the year, the industry’s prediction of modest semiconductor sales growth for 2020 looks unlikely to come true, says data and analytics firm GlobalData.

Photo Source: Samsung’s mobile processor, the Exynos 9820.

GlobalData recently published a report to reflect the impact of COVID-19 on 17 separate TMT sectors and the leading companies within. This report discusses the short and long-term impacts of COVID-19 on each sector, and ranks on a company-by-company basis the individual impact of the virus alongside nine other themes that affect that sector. All sectors will be negatively impacted.

“US majors, such as Intel, Qualcomm, and Texas Instruments derive 30% or more of their revenues from China and the market is seen as a major source of potential growth,” says David Bicknell, principal analyst in the Thematic Research Team at GlobalData. “The COVID-19 outbreak means US companies’ ambitions will suffer, with little prospect that China’s growth engine will rev up again in 2020. That said, COVID-19 is no sector game-changer. China will continue to make its economy more self-sufficient, driven by domestic consumers buying products designed and made in China. The US industry must face up to the fact that its biggest market will eventually become its biggest competitor.”