COVID-19 causes 16 percent drop in automotive power semiconductors revenue

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Analyst firm Omdia recently published a report estimating the coronavirus pandemic will prompt a 16 percent year-over-year drop in automotive power component revenue. Semiconductor Digest notes the one-two punch of temporary production shutdowns and diminished consumer demand caused the market contraction.

However, the auto power IC, module, and discrete sector could rally in 2021, provided the outbreak is sufficiently contained.

Global Automotive Power Semiconductor Revenue Decline

According to Omdia, worldwide vehicle power component revenue will total $9.1 billion in 2020, down from $10.8 billion in 2019. The organization notes the sector looked to make a big surge this year as demanding driving trends like vehicle electrification and infotainment cockpits have become increasingly popular in automobile design. However, the coronavirus pandemic prompted an unexpected reversal in what seemed like a growth period.

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While COVID-19 has had a deleterious impact on the entire global semiconductor industry, its effect on the ground transport component segment has been pronounced.

The World Semiconductor Trade Statistics (WSTS) organization recently reported the worldwide component market grew by 6.1 percent in April. However, semiconductor manufacturers that derive significant revenue from producing automotive parts have not fared as well. Indeed, the Netherlands’ NXP Semiconductors, Germany’s Infineon Technologies, and Switzerland’s TE Connectivity all posted soft earnings due to dips in the auto market.

In addition, consumers have shown reluctance to purchase new high dollar products like cars and smartphones due to global economic contraction. Consequently, OEMs are slashing orders of mobile application power semiconductors as a reaction to changing market trends.

A Brighter Forecast For 2021

Although Omdia expects 2020 will be a down year for the vehicle power component segment, the organization has a brighter forecast for 2021.

The analyst group expects revenue from power IC, modules, and discrete semiconductors sales will again exceed $10 billion next year. The firm also predicts the sector will experience a 20 percent rally beginning early next year if a second wave of COVID-19 infections does not break out, and an effective vaccine or new treatment is developed. In fact, the organization predicts a successful resurgence of the segment would enable a compound annual growth rate of 7 percent through 2025.

So far, real-world market conditions have aligned with Omdia’s predictions.

In China, government efforts to control the spread of the coronavirus pandemic have allowed local manufacturers to restart operations. NXP CEO Kurt Sievers told CNBC the country’s return to normalcy had prompted an uptick in vehicle purchasing. As China is the world’s largest automobile market, Sievers noted the region’s recovery would have a positive impact on his company’s bottom line.

Hopefully, NXP’s findings and continued adoption of electric vehicle manufacturing and unified digital cockpits will drive the auto power semiconductor sector to new heights next year.

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