Despite the pandemic disrupting life around the world in 1Q 2020, quarterly semiconductor revenues declined by only 3.4% from 4Q 2019 and were up 6.8% compared with 1Q 2019 revenues. However, part of that recovery is the fact that 1Q 2019 revenues were down -14.6%, a much higher decline than seasonally normal for a first quarter. Units fell -5.6% sequentially. Our overall 2020 revenue forecast has been lowered to slightly negative to -0.22%.
The blue line in the IPI chart above shows the IPI predicting a recovery in the second half of 2020, but the model does not take into account the highly unusual conditions brought upon us by the pandemic. While Semico's forecast is not following the strength and direction of the future IPI line, it does show the underlying potential strength of semiconductors driven by sales, orders, backlog and inventories for computing, communications, medical and consumer electronics that have now become more essential in this new COVID-19 environment.
"After the 2008 financial crash, the economic outlook was grim. Unemployment rose semiconductor sharply; GDP crashed; and housing and auto sales collapsed. Many forecasters predicted an L-shaped or U-shaped recovery that would span multiple years. Semico's forecast model is based on the fundamentals of semiconductor end products and it accurately predicted a semiconductor V-shaped recovery", says Jim Feldhan President of Semico Research. Semico pointed out in the November/December 2019 IPI report, a recession was already looming on the horizon. The Covid-19 pandemic pushed the economy into a quick and deep contraction but even with a worldwide economic downturn, there is a silver lining for the semiconductor industry. Today there is an increased reliance on electronic technology compared to the needs in 2008. Although the automotive segment will be the most negatively impacted, the need for medical equipment both industrial and consumer, the increased demand for PC upgrades and the need for 5G builds a case for a less dramatic impact on the semiconductor industry for 2020."
Semico is a semiconductor marketing & consulting research company located in Phoenix, Arizona. Semico was founded in 1994 by a group of semiconductor industry experts. We have improved the validity of semiconductor product forecasts via technology roadmaps in end-use markets. Semico offers custom consulting, portfolio packages, individual market research studies and premier industry conferences.