- Smartphones will continue to be the largest demand driver and will remain weak overall given the concentration in volumes being 4G
- Semiconductor revenue declined 12.2 percent in 2019 to $418 billion
The semiconductor revenue will decline 4.2 per cent in 2020 from $418 billion in 2019 as per a report by IDC. It also said that excluding the DRAM and flash markets, semiconductors are expected to decline by 7.2 per cent. Semiconductor revenue declined 12.2 percent in 2019 to $418 billion.
The report said that smartphones will continue to be the largest demand driver and will remain weak overall given the concentration in volumes being 4G. A big section of Chinese OEM will need to work down inventories after stuffing the channel over the past couple of quarters. This will drive the rest of the OEMs in China to concentrate on launching 5G devices to make use of potential subsidies by carriers later this year.
COVID-19 will drive contraction in the overall semiconductor market
IDC also expects that 5G volumes will grow this year despite the demand uncertainty. This will drive strong semiconductor content due to the fact that OEMs position 5G in lower tiers to broaden the reach. It said that every per cent drop in smartphone unit volume expectations will have a couple of percentage points of impact on overall semiconductor revenues for the year.
As per IDC, instead of an anticipated bottom and gradual recovery in 2020, the emergence of COVID-19 will drive another contraction in the overall semiconductor market.
Mario Morales, program vice president, semiconductors at IDC said, “The strength in demand in March and early April have made computing, connectivity, and memory products more resilient. However, the global shelter in place orders and ongoing shift in buying behavior toward essential goods and services will negatively impact consumer and business spending in the second quarter and second half of the year. The nature of the recovery will in large part depend upon how quickly government stimulus plans stabilize the global macroeconomy and consumer confidence. As we reopen across the globe, including our borders, how long will it take us to get back to normal and start rebuilding our lives from shock of the pandemic?”
Decline in automotive semiconductor growth by 2.7 per cent to $38.4 billion
IDC said that the automotive and industrial semiconductor markets, which in the past were projected to outperform the other segments, have been particularly hit by COVID-19. Automobile sales including light commercial vehicles in 2019 declined 5.6 per cent to 81.4 million vehicles. This resulted in a decline in automotive semiconductor growth by 2.7 per cent to $38.4 billion. Industrial semiconductors fell 6.6 percent to $37.8 billion in 2019 and it will show a decline of 11.4 percent in 2020.
Nina Turner, research manager for Automotive Semiconductors at IDC said, “With the shelter in place orders and shutdowns of non-essential businesses, automobile sales will continue to decline significantly in 2020. Recovery depends on the length of these shutdowns and how fast consumers can recover from their economic losses. Government economic and stimulus policy will also have an impact on how fast automobile sales and automotive semiconductors can recover,” said Nina Turner, research manager for Automotive Semiconductors at IDC. For 2020, non-memory automotive semiconductors are forecast to decline another 14 per cent and are not expected to return to growth until 2022.”
