To lie low, to change the course, to shed dead skin, and to make new friends – Darwinian reflexes never go out of vogue. So, while we heard alarms about the future of the semiconductor industry, thanks to the direct blow to supply chains and fabrications, we might have missed the wind-chimes that were following close enough.
Yes, dents will happen given the force of this blow, but long-term species have a way of healing themselves and finding ways to go on. For this industry, this survival and adaptive dance would be two-pronged, as it appears now.
First, the demand would change tack. If electronics and upstream markets dry up, other pockets of growth would pop. Second, rock-stars in semiconductor materials might see new contenders emerging and gaining a good foothold. Wondering how? Let us break it down.
Same market, new appetite
Ok yes, the effect of the Corona outbreak is not something we can trivialize. If we look at Gartner’s recent reckoning, the worldwide semiconductor revenue was already going backward to USD 419.1 billion in 2019, down 12% from 2018. It noted how oversupply in the DRAM market nudged the overall memory market down 32.7% in 2019, making it the worst-performing device segment; especially the NAND flash that dived 26.4%.
So things can’t pick up immediately when weak demand from smartphone and hyper-scale cloud service providers affect fab plans and cut wafer starts to levels below 2018.
But while that happened the optoelectronics segment actually shot up by 6.6% in 2019. Even if consumer and enterprise spending goes sluggish due to the impact of Coronavirus, making the global semiconductor market decline 0.9% in 2020 instead of the forecasted growth of 12.5% at the end of 2019, as per Gartner, other springs could show a hard-to-miss spurt.
According to Jim Handy, semiconductor analyst with market research firm Objective Analysis, the semiconductor business will struggle with supply chain issues, but the bigger impact will stem from any demand lapse that happens. “We’re not expecting the current price upturn to last much longer anyway, but the pandemic could cause prices to fall to cost sooner than we anticipated,” he said.
Let us comb through another report. This one is on the Semiconductor and Circuit Manufacturing Market by Meticulous Research and it tells that the semiconductor and circuit manufacturing market could be growing at a CAGR of 16.9% from 2020 to 2027. This clip could help it touch USD 4.7 billion by 2027.
Now would all of this shine come from the usual suspects – computers, laptops, telecommunications equipment, storage devices, mobile phones, medical equipment, automotive or new areas like artificial intelligence (AI), internet of things (IoT), big data analytics, drone, robotics, and 5G? Well, that would be hard to say. But more baskets mean the eggs would survive somewhere.
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