COVID-19 to rip auto power chip sales by 16% this year

Electric vehicle adoption could potentially be slowed by shortages of nickel and other metals used in vehicle batteries.
With the pandemic cutting into vehicle manufacturing, auto power chip sales will nosedive in 2020, even for electric vehicles and hybrids that had been a bright spot in 2019. (Pixabay)

COVID-19 has decimated multiple industries including auto manufacturing. Behind the falling demand for motor vehicles comes a new forecast of a 16% decline in sales of auto power semiconductors for all of 2020.

Market research firm Omdia said Thursday that global revenues for power semis used in auto applications will fall to $9.1 billion in 2020, down from $10.8 billion in 2019.

These semis include power discretes, power modules and power integrated circuits used throughout electronics systems in cars and trucks. In recent years prior to 2019, there had been strong annual growth in the segment in the high single digits, the firm said.  Then in 2019, there was a 1% decline over 2018 levels partly because of trade tensions, Omdia said.

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Before the pandemic, 2020 was supposed to be a rebound year for the auto power semi market, but the pandemic has shut down most auto plants for weeks, starting in China and then moving to other countries, said Kevin Anderson, an analyst at Omdia. Meanwhile, demand for new vehicles is down because dealerships were closed over fears of spreading the virus.

Auto plants that were closed and have reopened are not all operating at full capacity, partly because of component shortages and reductions in workers to preserve social distancing guidelines. Omdia said the latest new vehicle build forecasts are down more than 20%, to less than 70 million units for the full year.

Omdia said discrete power semis and power ICs for auto use are expected to drop by 17% in 2020. Even power modules are expected to see an 8% decline in revenue for all of 2020 after experiencing a 7% increase in 2019 with increased production of electric vehicles and hybrids.

Revenues for modules used in advanced driver assistance systems (ADAS) grew 12% in 2019 and will decline by 3% in 2020, Omdia forecast.  Power train systems grew by 1% in 2019 and will decline by 13% in 2020. Power modules for use in safety and infotainment systems grew in the single digits in 2019 but will decline to as much as the low 20s percent in 2020.

Vehicle sales could rebound in 2021 if there is no second wave of the virus, which would increase power semi sales to the mid-20% range, Omdia added. Thereafter, the annual growth rate would return to 7% until about 2025.

RELATED: Top analog chipmakers saw sales decline in 2019, new report says

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