February dip in China’s chip market shows world what’s coming
The steepness of the fall in China’s market for chips is all the more significant because the SIA reports WSTS figures as the average of the nominal month and its two predecessors. The sequential fall is undoubtedly due to the Covid-19 epidemic and is likely to play out across all geographic regions in the months to come. It also looks likely to stifle what would have otherwise been a strong recovery from a weak 2019.
The three-month average February market in the America’s region was up 14.2 percent year-on-year and most regions showed an annual increase. Despite its sequential fall China – which makes up about one third of the global market – was up 5.5 percent year-on-year. Sales increased year-to-year in Japan by 7.0 percent but were down in Asia Pacific/All Other (-0.1 percent) and Europe (-1.8 percent).
The overall result is that the three-month average global chip market in February was $34.50 billion down 2.4 percent compared with January 2020 but up 5.0 percent on February 2019. It now seems likely that the Covid-19 pandemic will produce an economic effect larger than the dot-com bubble in 2001 and the financial crisis of 2007-2008. The best hope is for a sharp V-shaped recovery.
Three-month average of chip sales by geographic region for February and January 2020. Source: SIA/WSTS.
Next: Regional comments
“Global semiconductor sales in February were solid overall, outpacing sales from last February, but month-to-month demand in the China market slipped significantly and the full impact of the Covid-19 pandemic on the global market has yet to be captured in available sales numbers,” said John Neuffer, CEO of the SIA, in a statement.
The European Semiconductor Industry Association commented that its regional market was supported in February by strong demand for analog devices (+2 percent), logic devices (+1.7), and MOS microcomponents (+1.4). The memory market continued to rebound strongly in February, with a 14.8 percent increase from January.
Monthly data is given by the SIA as a three-month average although the source of the data, the World Semiconductor Trade Statistics organization (WSTS), tracks actual monthly data. The SIA and other regional semiconductor industry bodies opt to use averaged data because it evens out the actual data that typically shows troughs at the beginnings of quarters and peaks at the ends of quarters.
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