Semiconductor Industry: Current Trends and Impact on Demand

Coronavirus is the word on everyone’s lips, and this is no different in the electronics industry. The supply of parts and components has, of course, been affected and so people are starting to look at how it has impacted specific types of components. In this article, we take a look at the semiconductor industry in light of COVID-19, including the current trends and what the impact has been on demand.

What is the semiconductor industry usually like?

The semiconductor industry is critical to the production of a wide range of electronics, including consumer electronics, automotives, healthcare electronics, AI and more, meaning it is typically very strong.

Prior to the COVID-19 outbreak, there were some issues with component supply relating to the US-China trade war but this didn’t have a massive impact on the industry as a whole.

How has COVID-19 affected the semiconductor industry?

The very beginning of the COVID-19 outbreak mainly affected Asia, but many component manufacturers are situated in Asia so it had an impact straight away. Early into the outbreak, many of these manufacturers had to halt production completely – and this, paired with global travel restrictions, meant that there were some serious supply issues.

However, production seems to mainly have resumed now and the fears surrounding supply chain shortages are not quite as extreme as before. Having said that, many component manufacturers are now having to put social distancing measures in place and so overall output for the year will still be lower than is typical as production must continue at a slower pace.

How has COVID-19 affected demand for semiconductors?

It is generally thought that demand for semiconductors has and will continue to vary based on the sector. For example, consumer spending has reduced overall due to financial worries and so the demand for semiconductors in consumer electronics, which has a big market share, has been lower than usual and will continue to be so. Conversely, the demand for semiconductors in medical equipment has been heightened by the increased number of people falling ill.

Will it recover?

Like many other industries, the semiconductor industry has found it necessary to make operational changes in order to survive, adjusting production in line with the impact of the virus.

Despite the many challenges presented to the semiconductor industry as a result of the global pandemic, it is thought that the industry will make a recovery, albeit slow and steady. It all depends on whether the virus can be controlled but it seems that there is room to be optimistic.

For example, one report by Wakefield Research in June suggested that the semiconductor industry is set to ‘rebound strongly’. They conclude the report by stating:

“As economic activity recovers, Wakefield Research forecasts demand for semiconductors to recover quickly, as companies begin to renew their investments in cloud infrastructure and as artificial intelligence and connected devices become increasingly commonplace in our society.”

It seems that, although the semiconductor industry has taken a blow, its importance in our lives will ensure that it recovers. Perhaps not all manufacturers will make it, but the industry will certainly bounce back.

If you are looking to source semiconductors from a reliable source, we recommend partnering with a component distributor who will be able to take a flexible approach in sourcing the electronic components you need from trusted suppliers.

Rebound Electronics is a proactive distributor of electronic components such as semiconductors – if you have any questions, or would like to learn more, you are welcome to get in touch.