In the space of three months, the backdrop for the semiconductor sector has changed, but long-term issues remain and must be solved, says GlobalData, a leading data and analytics company.
David Bicknell, Principal Analyst, Thematic Research at GlobalData, comments: “The COVID-19 pandemic will shrink worldwide end-user demand for everyday products powered by semiconductors. COVID-19’s impact also means much of the industry is only operating at about 50% capacity, though China is moving again. At the same time, the global supply chain has stalled, exacerbated by COVID-19-related border checks that could last for months.”
The good news is that, on the supply side, the manufacturing operations of China-based dynamic random access memory (DRAM) and flash memory plants have been largely unaffected, as highly automated semiconductor fabrication plants need little manpower. COVID-19 has triggered surging demand among millions of people worldwide for online services and apps but, so far, there has been little disturbance to the supply of extra servers for China’s data centers.
Bicknell concludes: “The captive semiconductor operations of Apple, Huawei, Google, Amazon, and Alibaba, remains long-term, up to five years ahead, and designers can use cloud-based services. By then, China’s currently weak semiconductor industry will have grown to become a challenging competitor for the US.”