Most semi execs see industry downturn in 2020, survey says

Most semiconductor executives in a small poll predicted a downturn in semi revenues in 2020. (Pixabay)

Nearly 80% of global chip executives believe industry revenue will be flat or decline in 2020, according to a new survey by the Global Semiconductor Alliance and KPMG.

The findings, reported Tuesday, reflect the opinions of 22 senior executives and board members who serve on 22 different companies, although none of the companies were identified.

 A total of 18% said revenue growth in the chip industry in 2020 would be 0% or decline, while 23% predicted a 1% to 5% decline and 18% expect a 6% to 10% decline.  Another 18% said the decline will be greater than 10%.

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The survey considers the impacts that COVID-19 has had on global economies, including supply chains and customer demand.

While the survey sample is small, it offers insights beyond what some semiconductor companies are willing to offer in the latest round of first quarter financial results.  Many companies are not forecasting results beyond the second quarter because of the unpredictability of the spread of COVID-19 and the inability for people to work in some cases, resulting in manufacturing and supply chain shutdowns or delays.

The executives were asked to predict year-over-year revenue growth for 2020. The consensus forecast at the start of the year was that industry revenue growth would reach 3% to 7%.  Of those surveyed, just 18% predicted revenue growth would be 1% to 5% upward, while just 5% said greater than 10%. 

With such a small survey sample, even one or two company executives could have argued for growth greater than 10%.  Intel recently reported first quarter revenues that up 23% over a year ago, while forecasting second quarter revenue growth of 12% over a year ago. The company is not providing full year guidance, however.

RELATED: Intel pegs 23% revenue boost from data center, PC chips

The GSA and KPMG survey also found that nearly two-thirds of the executives said they had supply chain shortages as a result of the virus.  A total of 27% said that supply issues have impacted chip sales, while 36% said they experienced shortages but not significant shortages that are impacting sales.  The remaining 36% said they not experienced supply chain shortages, as of the April time frame.

All the respondents said their companies have allowed employees to work from home or have made alternative work arrangements due to the virus. Only 14% said they are making targeted employee furloughs or headcount reductions.  More than half of the respondents said they plan to revise business continuity plans as a result of the virus and will implement upgrades for collaboration, cloud and automation technologies.

A total of 77% said they expect to resume business operations within a calendar quarter if the virus situation subsided by June 30, while 59% said it will take up to six months to resume revenue generation.  Also, 14% said revenue generation won’t come back until 2021 or beyond.

The survey also asked about the impact of COVID-19 on investment, adoption and growth for four different application end markets.  For 5G, AI and Internet of  Things, 59% of respondents said the impact will still be positive but for autonomous vehicles, only 9% said the virus will be positive, while 27% said the impact will be negative and 59% said the impact will be neutral.

GSA has 300 corporate members in 30 countries.  The GSA board president is AMD CEO Lisa Su.

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