Gartner: Global semiconductor revenue to decline by 0.9 percent in 2020

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Gartner reports component market down due to coronavirus.

April 9—Research company Gartner recently announced a revision to its 2020 semiconductor revenue forecast. The firm cut its initial estimate of $470.4 billion by 11.6 percent and predicts the sector will contract from 2019. The organization previously projected annual growth of 12.5 percent annually, but the coronavirus pandemic altered the landscape considerably.

However, Gartner’s new guidance indicates the memory chip market will experience significant growth this year because of the outbreak.

Coronavirus Hurts Semiconductor Production and Demand

In its forecast update, Gartner notes the coronavirus outbreak has negatively affected both semiconductor production and demand.

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Indeed, government lockdown orders in China, India, Vietnam, and Malaysia have caused significant disruption in the global component supply chain. Analog Devices, Micron, Microchip, and Molex have withdrawn their revenue forecasts because the pandemic caused significant manufacturing and logistics delays. Similarly, ON Semiconductor and Qorvo made multi-million-dollar revisions to their guidance due to diminished demand.

Gartner now predicts softening component demand will cause a year-over-year revenue dip of 0.9 percent, with total annual worldwide sales of $415.4 billion.

Memory Chips on the Rise

The analytics group’s new forecast is not all bad news, though; Gartner predicts memory module revenue will go up 13.9 percent, with a full-year yield of $124.7 billion. In particular, the organization’s revised projections indicate NAND sales will jump by 40 percent in 2020 because of increased demand and supply shortages.

The firm’s estimates are supported by recent financial disclosures from two of the world’s largest memory chipmakers. In late March, Micron beat Wall Street revenue estimates by 2.56 percent on account of increased sales to data centers. Similarly, Samsung reported better-than-expected Q1 2020 earnings on the back of robust NAND and DRAM shipments.

Gartner explained memory component sales are rising despite declines in the rest of the industry because hyperscale data centers and telecommunication equipment companies are doing brisk business during the pandemic. As COVID-19 has forced millions of people to work remotely, internet service providers and cloud platforms are scrambling to reinforce their networks and digital infrastructures.

On the other hand, companies that make semiconductors for automobiles and electronic devices are hurting because the coronavirus pandemic is suppressing consumer spending.

With more than 1.49 million cases confirmed worldwide, COVID-19 is not going away anytime soon. But the outbreak will inevitably be contained, and when that happens, resilient component manufacturers will recover from the pandemic’s devastating impact.

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