Electronic Products & Technology

What’s next for microelectronics after Covid-19?

By Maria Paula Moreno, marketing manager, NeuronicWorks Inc., Toronto   

Electronics Engineering Software Engineering Supply Chain

What's in store once the pandemic subsides and life begins to return to normal

Like every other sector of the global economy, the microelectronics industry has been impacted by the COVID-19 pandemic, and the disruptions it has caused to daily life worldwide. With our own team working remotely as much as possible, we wanted to take a look at not only how the microelectronics industry is being affected now, but what might be in store for the sector once the pandemic subsides and life begins to return to normal. 

Impacts on the industry today

In a recent webinar, Ajit Manocha, President and CEO of SEMI, the global industry association for the electronic product design and manufacturing industry, revealed the results of a commissioned survey of the status of the sector during the pandemic.

Despite the challenging situation, the good news is that 77% of respondents expect to meet their manufacturing output goals, with roughly 20% anticipating opportunities for new business as a result of the current situation. Fully 58% of manufacturers plan to diversify their supply chain in light of the current experience, with the rest likely already in the process of doing so.

That said, these manufacturers shared several common concerns, including employee safety, shipping and receiving challenges, and the prospects for economic and business recovery once the crisis has passed, including how and when supply chains can be re-established at capacity.


Supply chain questions remain

COVID-19 has further exacerbated what was already a period of flux for the ASEAN supply chain. With the ongoing trade war between the United States and China in 2019, many companies in China that exported to the United States took it upon themselves to relocate to Southeast Asian countries, such as Vietnam and Thailand, to circumvent tariffs. The advent of the coronavirus has impacted not just manufacturing capacity but utilization rates as well, as factory closures and travel ban have resulted in labour shortages throughout the region.

A recent white paper from Deloitte on the impact of the coronavirus on the semiconductor industry highlighted the single point of failure in semiconductor supply chains brought to light by the emergency. The authors of the paper suggest that, as a consequence, manufacturers should modify their supply chain strategy to address geographical concentration and its consequent lack of resiliency in black swan events like a global pandemic.

Deloitte suggests that semiconductor companies move to an “agile supply node network,” which favours multiple pathways of supply that help eliminate the risks of a single point of failure. As a regional-based approach to supply, an agile supply node network would enable manufacturing and supply nodes to be quickly scaled up as needed in the event of an emergency.

Bright Spots on horizon for microelectronics

Emerging technologies like 5G, the Internet of Things, high-performance computing, and artificial intelligence will be fundamental to an overall recovery by the technology sector. Timing of the recovery from the impact is uncertain, however, with estimates running from a very optimistic one to three months, to a far more pessimistic nine to twelve (or more) months until a full recovery.

In the meantime, a number of electronics manufacturers (including Sharp, General Motors, Ford, and Tesla) are all doing their part to combat the pandemic by making ventilators and other medical and safety equipment (such as surgical masks) to help treat the virus and keep frontline responders protected. These companies keep their own productivity and sales up during the downturn while putting their manufacturing power to good use.

Wild card: Consumer sentiment

The biggest question in all this—even more than when supply chains or manufacturing capacity might again be operating at their pre-crisis levels—is the question of what lasting impacts the pandemic will have on consumer sentiment. With consumers stocking up on medications and essential provisions for extended isolation, and with a plunging stock market, and growing oil price war, the global economy is suffering a kind of economic perfect storm that will surely hurt the purchase of high ticket consumer items and durable goods—everything from smartphones to TVs and automobiles. This decline will impact the sale of microelectronics throughout 2020 and perhaps beyond.

The silver lining, however, is that like other disruptions in the past (like 9/11 or the H1N1 epidemic), the short-term impact that isolation is having on our lives now could have positive long-term implications for the electronics industry.

More work, education and events that have shifted online temporarily during this crisis could end up permanently in the virtual space. Manufacturers of everything from smartphones, to PCs, to virtual reality (VR) headsets, and Wi-Fi routers could see positive knock-on effects of these structural changes in society, as a need for communications infrastructure, services, and applications is created. Allied industries like autonomous delivery solutions, telemedicine, autonomous vehicles, and automated manufacturing could all see increased uptake, offering yet another long-term silver lining for the electronics industry.

So, despite short-term pain and uncertainty, the last impacts of the pandemic on individuals, markets, and society offer upside potential for the electronics industry in both the short and long-term.


NeuronicWorks Inc. is an electronic engineering design house based in Toronto. https://neuronicworks.com/


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