How Covid-19 will impact the 2020 global chip market
Many analysts expected the global chip market to demonstrate a moderate single-digit percentage year-on-year growth in 2020 – until the full implications of the Covid-19 pandemic hit home. These implications are both human, in terms of loss of life and illness, but also economic in terms of a likely global recession and disruption of technology supply chains.
IDC has attempted to analyze what is still a fast-changing situation and now forecasts that the most likely outcome will be year-over-year global revenue contraction of 3 to 6 percent in 2020. IDC gives this a scenario a 54 percent probability indicating that a bigger decline is also possible, with about a 25 percent probability. Alternatively, a fast recovery that could still render 2020 a growth year.
The IDC report considers four scenarios based on different assumptions and severity of the impact to business for technology suppliers.
“The emergence of COVID-19 has brought with it travel bans and quarantines; massive slowing of the supply chain; uncertainty in the stock market; falling business confidence, and growing panic among the population,” said Mario Morales an analyst specializing in semiconductors at IDC. ” Emerging technologies like 5G, the Internet of Things, high-performance computing, and intelligent edge will be fundamental to an overall recovery by the technology sector.”
IDC now believes there is an 80 percent chance of significant contraction in semiconductor revenues in 2020 instead of its previous expected growth of 2 percent. But that still leaves a 20 percent chance, that a strong bounce back from Covid-19 is possible in 2020.
In IDC’s most likely scenario, the supply chain will start to recover in 3Q20 with lockdown’s quarantines and travel bans being lifted. The result will be a loss of about $25.8 billion of chip revenue from the market. In the short term, there will be lower component availability but also lower demand, IDC said.
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