The coronavirus pandemic has had such a devastating and multifaceted impact on the world, it’s difficult to quantify. Indeed, the outbreak has caused massive disruption within the global semiconductor production line and logistics infrastructure. However, as government and corporations have taken steps to mitigate the impact of COVID-19, certain trends have emerged.
As such, here are three recent developments that will likely shape the future of the components sector.
PC and Data Center Chip Demand Increase
Zacks Investment Research recently published a report examining how the coronavirus pandemic has affected the semiconductor market. The firm noted supply chain problems and diminished demand had hurt smartphone and automotive chipmakers. Conversely, the company explained corporations that manufacture components for personal computers and data centers have experienced significant revenue spikes.
The group attributed the fact that Micron’s fiscal second-quarter earnings outpaced market analyst expectations because it’s a PC and data center chip supplier. Also, the group states Samsung and AMD have seen sales bumps in their memory components and CPU segments, respectively.
The organization noted government quarantine orders have caused many employees to start working from home, and staffers have had to acquire new equipment to facilitate the transition. Similarly, COVID-19 related school closures have prompted an uptick in the utilization of virtual classrooms. In addition, the massive surge in remote work/learning requirements has caused a commiserate spike in internet usage.
Since various world governments predict COVID-19 pandemic containment will not ease in the near future, demand for consumer electronics and data center components will remain strong.
5G Deployment has Become a Necessity
Quarantine mandates are doing more than increasing the global usage of video conferencing tools like Zoom. Streaming media services like HBO Now and Disney Plus have seen considerable surges in sign-ups from bored homebound citizens. Indeed, Netflix and YouTube usage rose so much in Europe, that government officials asked those companies to lower their bitrates to preserve the region’s internet accessibility.
Though the coronavirus pandemic is temporary, the new demands it has placed on the global data infrastructure are looking increasingly permanent.
Fast Company points out corporations can get a lot of out of converting their on-site staffers into remote employees. A homebound workforce allows companies to drastically lower business travel costs and expand the pool of potential hires. Moreover, research firm Global Workplace Analytics points out 43 percent of U.S. jobs can be done from home.
However, if working remotely becomes widely normalized, aging data networks will need upgrading. In a recent interview, Marvell CEO Matt Murphy said 5G technology represents a solution to that problem. The executive explained fifth-generation mobile data transfer tech has the “spectral efficiency” to facilitate massive bandwidth consumption at a lower cost than existing systems.
As Murphy correctly noted, “semiconductors are the essential building blocks” of innovative technology like 5G. While the deployment of fifth-generation networks is currently delayed in some regions due to the coronavirus outbreak, it will eventually continue because of its application as a data infrastructure panacea.
Accordingly, companies that supply components for telecommunications gear will benefit from 5G’s coming ubiquity.
Big Tech Invests in AR Wearables
The widespread economic instability brought on by the COVID-19 pandemic has caused several major corporations to pause their merger and acquisition activity. Refinitiv reports M&A deal-making has fallen by 28 percent worldwide in the first quarter and 51 percent in the United States.
However, augmented reality (AR) technology has been at the center of some multimillion-dollar transactions recently.
In early January, Snapchat spent a reported $166 million to buy a startup called AI Factory, which specialized in making AR tools. The tech brand likely snapped up the company to bring new functionality to its Spectacles smart glasses.
Earlier this week, “Pokémon Go” developer Niantic announced it purchased 3D mapping company 6D.ai, an innovator in the AR space. Also, the games company recently revealed it had teamed with chipmaker Qualcomm to produce an AR eyewear product.
Furthermore, Facebook is spending big money on AR development because CEO Mark Zuckerberg believes smart glasses will be the new smartphones.
The social network paid a reported $40 million to acquire a British startup called Scape Technology that makes computer vision software with virtual reality and AR applications. The Menlo Park, California-based concern also inked an exclusive supply deal with microLED manufacturer Plessey to further its AR headwear production capability.
Notably, Facebook outmaneuvered Apple to make a deal with Plessey, a corporation with its own AR eyewear project.
Big Tech’s recent AR acquisition spree indicates smart glasses are a major area of interest for Silicon Valley. Mass production of various connected eyewear offerings within the decade seems certain, as does the success of AR-related semiconductor companies.
Although it’s impossible to gauge the full effects of the coronavirus pandemic presently, its impact has undeniably changed global industry. Once the world recovers from COVID-19, the above-listed trends will likely inform the direction of the semiconductor market.