The Semiconductor Industry Association (SIA) recently reported global semiconductor revenue rose by 5.8 percent in September year-over-year. The worldwide electronic components market also grew by 4.5 percent sequentially, a positive change caused by increased sales in all major regions.
However, the global chip market may experience some contraction in October due to a pair of volatility creating events.
The Americas, China, and Asia Pacific Region Drive Semiconductor Market Growth
In September, the worldwide semiconductor industry generated $37.86 billion in sales. The Americas led the chart in annual growth, jumping from 20.1 percent from $6.73 billion to $8.09 billion. China grew its electronic components revenue by 6.5 percent year-over-year and had the largest gross income of any region with $13.45 billion. The Asia Pacific region generated $10.23 billion in part revenue in the same period, a year-over-year increase of 2.9 percent.
SIA President John Neuffer said the global semiconductor market’s strong showing in September reflected the traditional pre-holiday quarter uptick in demand.
At the end of every year, electronics makers release new and upgraded devices to take advantage of the gift-giving season. To facilitate the production of their latest hardware, leading manufacturers stock up on electronic components in early fall. This year, Apple, Sony, and Microsoft are all deploying hotly anticipated new products. The large component orders made by those three corporations likely pushed chip sector revenue past 2019 levels.
But the rising tide did not raise all ships across the world to the same level.
The SIA found Europe’s electronic components sales fell by 9.8 percent from last year while Japanese semiconductor revenue dipped by 1.8 percent. That said, Europe and Japan saw sequential improvements of 3.3 and 1.5 percent, respectively. As those two areas have the world’s smallest major chip markets, their modest seasonal gains make sense.
The Huawei Factor and COVID-19
Although the global component market has done well through 2020, two recent developments could impact its growth in the fourth quarter.
On September 15, the U.S. Commerce Department enacted new policies restricting Huawei access to certain American derived semiconductor technology. The agency’s updated regulations mean firms, even those based outside the United States, can be subject to non-compliance sanctions. As the Chinese conglomerate previously poured billions of dollars into the market every year, its altered status might affect chipmakers worldwide.
In addition, a second wave of the coronavirus pandemic has hit the West recently.
To clamp down on the disease’s spread, local leaders in the U.S and Europe have begun to impose self-quarantine mandates. If infection rates continue to intensify, production shutdowns and travel restrictions made earlier this year could be reinstated. Similarly, demand for consumer electronics and personal transports could also plummet due to the COVID-19 resurgence.
With so much volatility in the marketplace, it is difficult to predict how the Huawei restrictions and the pandemic will impact the global semiconductor industry. The two events overlapping could result in September being the last month of component sector growth this year.