Covid-19 hits automotive power chip market

Covid-19 hits automotive power chip market

Market news |
By Christoph Hammerschmidt

The Covid-19 outbreak has hit sales of automotive power semiconductors hard, resulting in a global market revenues falling 16 percent in 2020 says market researcher Omdia. However the market is predicted to recover in 2021 with continued growth in the following years.

The global impact of Covid-19 means worldwide revenue for power semiconductors in automotive applications will fall to $9.1bn in 2020, down from $10.8bn in 2019, according to Omdia’s Power Semiconductors in Automotive Report – 2020.

“The year 2020 had been expected to bring a rebound for the automotive power semiconductor market,” said Kevin Anderson, practice lead for power, automotive and industrial semiconductors for Omdia. “However, the Covid-19 pandemic shut down most automotive assembly plants for several weeks—first in China and then throughout the rest of the world. At the same time, demand for new vehicles has fallen as dealerships were closed and lost jobs and wage reductions in many parts of the world combined to slash demand.”

Even those plants that have reopened are not all operating at full capacity, due to component shortages and reductions in the numbers of employees on production lines as physical distancing measures are implemented. As a result, current new-vehicle build forecasts envision production of less than 70 million units in 2020, a decline of more than 20 percent from 2019.

Power semiconductor devices, including power discretes, power modules and power integrated circuits (ICs), are used extensively throughout automotive electronics systems.  This widespread adoption has propelled strong annual growth in the high-single-digit percentages for the automotive power semiconductor market in recent years.

However, 2019 brought a reversal in that trend. Trade tensions throughout the year combined with on-and-off tariff negotiations and the decline in some regional economies reduced vehicle builds and caused the automotive power semiconductor market to decline 1 percent compared to 2018.

After experiencing declines in the low single digits in 2019, discrete power semiconductors and power ICs for automotive applications are expected to post sharp revenue losses of nearly 17 percent during the current year. These devices are used throughout vehicle electronic systems, and because the electronic content and the complexity of those systems is increasing, the impact of reduced vehicle production on their revenue has been limited.

Power module revenues grew by 7 percent in 2019, benefitting from the increased manufacturing volumes of electric vehicles (EVs) and hybrid EVs (HEVs). Similarly, only an 8 percent decline in power module revenue is forecast for 2020.

As we have noted previously (above), a gradual pickup in sales is expected in the second half of 2020. If a serious second wave of the virus can be avoided then Omdia sees a rebound of vehicle sales in 2021. This would result in an increase in power semiconductor sales close to the mid-20-percent range in 2021. Furthermore, the long-term compound annual growth rate (CAGR) would return to 7 percent for the years 2019-2025.

The Omdia Power Semiconductors in Automotive Report -2020 includes breakouts by 35 electronic application areas and 30 different semiconductor device types.

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