Impact of Coronavirus (Covid-19) Pandemic on the Semiconductor Industry

COVID-19 has a significant impact on the supply-side as well as the demand side of the semiconductors industry. Due to short term imbalance in the demand from consumer electronic industry, semiconductor foundries had to shut their operations, Also, the supply chain has disrupted, which in turn created a short-term impact on lead times, backlog commitments, forecasts, costs, and workforce management. According to Coherent Market Insights’ analysis, the COVID outbreak will decrease growth of the semiconductor industry by 0.8%-0.10% in 2020, from 12.5% in 2019. Furthermore, demand for PC/server, wired communication, and consumer products has dropped, while demand for wireless communication has increased and will continue to rise by 8%-10% owing to a shift in enterprise working model. Therefore, technology solution providers dealing in wireless communications solutions segment represent a sizeable market opportunity amid COVID outbreak.

Enterprises are transforming their business operation models to streamline their operations in this unprecedented crises. The shift from traditional office-based working model to work-from-home operation model has created significant demand for wireless-communications solutions. The demand for wireless solutions has gained significant traction owing to increasing need for security upgrades to the existing enterprise infrastructure, higher internet traffic spurring demand for internet connectivity devices, and increasing adoption of conferencing tools and solutions.

In 2019, China accounted for more than 50% of worldwide semiconductor material consumption. Amid COVID-19, the disruption in China have significant impact on the entities involved in the electronics value-chain across the global marketplace. Furthermore, critical electronics manufacturing hubs are in idle-state to limit the COVID spread. The confluence of all these events has hit the supply-chain worldwide, impacting suppliers via shortages of components, materials, and finished goods. Incidences and implications of measures in handling Covid-19 has made it black swan, challenging the semiconductor industries to transform their supply chain model, and aim at decreasing their reliance on other countries especially China for raw material, components, and chip fabrication.