COVID-19 whacks auto, wireless chips but boosts medical

Medical ventilators will be a big user of semiconductors in 2020, but fewer chips for cars and wireless will drag down the overall market. (GettyImages)

Fallout from COVID-10 means  growth in overall semiconductor revenues expected in 2020 will be cut in half, analyst firm Omdia said Thursday.

Instead of growing by 5.5%, the market for memory and nonmemory chips will grow by 2.5%.  Chips for the medical segment will rise by 6%, but chips for wireless and auto will be a major drag overall, Omdia said.

Omdia set the total market for 2020 at $439.3 billion in 2020, up by 2.5% from $428.5 billion in 2019.

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By comparison, analyst firm Gartner has forecast a more negative outlook. In early April, Gartner projected an overall decline of about 1% for semiconductor revenues in 2020, reaching $415 billion, as compared to $419 billion in 2019.  Growth in memory chips will be nearly 14%, with nonmemory declining 6%, Gartner said.

Omdia said modest growth in smartphones expected earlier has turned negative. Earlier growth forecast for wireless chips has been cut in half, from 4.8% to 2%, Omdia said.

With motor vehicle production expected to be down by 12% for all of 2020, there will be a 7.5% decline in semiconductor revenue for autos, Omdia added.

Medical electronics sensors will grow to $6 billion in 2020, up from $5.6 billion in 2019.  The overall medical sector will boost chip demand by 5.9%, causing the industrial semi market to grow by 2.5% in 2020.

“COVID-19 is causing rapid reallocation of priorities and funding the medical sector,” said Omdia analyst Myson Robles-Bruce, in a statement. “The consequences are direct, with an increase in demand for medical ventilators and surgical supplies, and indirect, with a boost in telehealth caused by the postponement or cancellation of routine appointments.”

Omdia also tracks ventilator shipments, which are now projected to reach nearly 700,000 units for the entire year, up about 60% from 2019.  Ventilators, with chips and other parts, will be worth $4.6 billion in revenues, up from $2.7 billion in 2019—an increase of 71%.

Semiconductors are widely used in medical devices used in hospitals. The overall medical end use market will result in $5.8 billion in semi sales in 2020, accounting for about 11% of the global industrial semi market, up from 8% in 2019.

Ventilators have been used for 70 years but have evolved from simple electromechanical designs to complex electronically-controlled systems, analyst Paul Pickering said.  Some ventilators have multiple microcontrollers, brushless DC motor controllers, touchscreens and USB or wireless connectivity.

Semi, an association of 2,100 companies in electronics design and manufacturing, recently reported that recent billings for semiconductor equipment in North America have increased over a year ago, although March billings declined from February.  In March, billings for semi equipment reached $2.2 billion worldwide, up 20% from a year earlier, but down from $2.3 billion in February. 

Semi reported increased billings for each of the last six months compared to the same months a year earlier, with a 26% increase in billings in February over a year earlier.

Semi CEO Ajit Manocha said the March billings “are starting to reflect a challenging market” adding that the year-over-year increase indicates that the semi manufacturing supply chain is “effectively maintaining continuous operations despite COVID-19 headwinds.”

RELATED: Samsung reports solid memory demand, drastic smartphone decline 

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