The global semiconductor industry is to experience a second straight year of contraction in production value this year as the COVID-19 pandemic dampens demand for chips used in mobile phones and automotive devices, TrendForce Corp (集邦科技) said yesterday.
Demand from remote working and online learning, which boosted PC and server sales in the first half of the year, is also likely to ebb in the second half, leading to an opaque outlook for business prospects, the Taipei-based research house said in a report.
Inventory issues might also return in the third quarter, while seasonal demand in the fourth quarter is uncertain, as it largely depends on whether commercial activities will return to normal soon, the report said.
Overall, increases in supply chain inventory might lead to milder revenue growth for the semiconductor industry in the second half, compared with the first half, it said.
This year as a whole, the global semiconductor industry is expected to see its production value fall 1.3 percent annually to US$301.9 billion, excluding the memory chip segment, TrendForce said.
That was a downward revision from its pre-pandemic forecast in December last year of a 3.8 percent annual expansion to US$317.5 billion.
“Due to the impact of the pandemic, consumer electronics, [and] automotive and communications segments are at a higher likelihood of reporting contraction, while computing [and] industrial devices are to have better growth opportunities,” TrendForce said.
Specifically, demand for chips used in servers, commercial notebook computers and Chromebooks are on the rise, but demand for chips for smartphones, consumer electronics and automotive components are slumping, it said.
As smartphone chips and chips used in automotive electronics account for more than 50 percent of the semiconductor industry’s overall production value, their decline drags down the overall chip industry, it said.
TrendForce said it is conservative about the market outlook for the second half of the year.
Integrated device manufacturers (IDM) suffered a drastic decline in production and shipments in the first two quarters due to pandemic-induced factory shutdowns and logistics disruptions, the researcher said.
Poor demand for vehicles added to the slump, it said.
TrendForce said it has a more upbeat outlook about fabless companies and foundries, which are to outperform IDMs, because production at foundries has been spared by the pandemic, as their factories are in places that have been less affected by the virus, the researcher said.
Fabless companies have greater flexibility in adjusting chip specifications to cope with changes in consumer demand, which helps them better weather the crisis, it said.
Fabless companies and IDMs are major clients of foundries.
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