Advanced Computing in the Age of AI|Friday, June 5, 2020
  • Subscribe to EnterpriseAI Weekly Updates:  Subscribe by email

Pandemic Uncertainty Clouds Chip Forecasts 

via Shutterstock

Uncertainty over the duration and impact of COVID-19 on the global economy is prompting uncertain forecasts in key technology segments like semiconductors, a market that was already seeing steep declines in equipment sales.

For example, projections for the global silicon wafer market released this week by the chip industry group SEMI are hedged, with alternate scenarios based on the greatest unknown: how long the pandemic persists?

In one scenario, SEMI said the impact of COVID-19 on wafer sales could be “confined to a few months.” That scenario would allow chip makers to build inventory during the second quarter to meet future demand.

That upbeat scenario “should soften the [pandemic’s] impact on sales for the quarter,” SEMI said Tuesday (April 14).

A weak semiconductor scenario seems more likely given other gloomy economic forecasts, including this week’s International Monetary Fund’s prediction that the global economy will contract 3 percent this year. That would be the worst downturn since the Great Depression.

SEMI’s downbeat scenario reflects those projections: If the pandemic slows chip demand beyond the end of June, third-quarter wafer shipments could take a beating. Especially hard hit would be 200- and 150-mm wafers, projected to decline 5 percent and 13 percent, respectively. Under this scenario, 300-mm wafer shipments would remain flat or decline slightly, SEMI said.

Demand for silicon wafers peaked in October 2018. Shipments declined 6.9 percent in 2019 on an annual basis. Among the possible scenarios cited by SEMI as the pandemic persists is the prospect that pent-up demand could help drive a recovery in the second half of 2020. It cited “rising expectations for normalizing inventory levels” along with anticipated growth in memory markets, datacenters and the shift to 5G wireless networks.

Market conditions are clearer, and less optimistic, in the chip manufacturing equipment sector. SEMI said 2019 equipment sales plummeted 7 percent year-on-year. Equipment sales peaked in 2018 at $64.5 billion, slipping to $59.8 billion last year.

The equipment sector was sustained by fab powerhouse Taiwan, which surpassed South Korea last year with sales of more than $17 billion, a 68 percent jumped. The Chinese and North American regions also registered gains, while other regions logged substantial declines in annual equipment sales.

According to SEMI’s breakdown, global sales of wafer-processing gear declined 6 percent in 2019 over the previous year. Chip assembly and testing sales also took a hit. Only the Chinese market managed to register gains in all but one equipment category, assembly and packaging.

Those gains will most likely be wiped out by China’s lockdown in early 2020 as the coronavirus began spreading from manufacturing hubs in Hubei Province late last year.

Other forecasts covering electronics sectors that consume large quantities of semiconductors predict “unprecedented” declines. For example, market tracker Omdia said Wednesday (April 15) it expects global shipments of flat-panels used in smartphones and other devices to plunge more than 11 percent as the coronavirus cripples demand.

About the author: George Leopold

George Leopold has written about science and technology for more than 30 years, focusing on electronics and aerospace technology. He previously served as executive editor of Electronic Engineering Times. Leopold is the author of "Calculated Risk: The Supersonic Life and Times of Gus Grissom" (Purdue University Press, 2016).

Add a Comment

Do NOT follow this link or you will be banned from the site!
Share This