Global semiconductor revenue expected to slump in 2020

Analysts predict COVID-19 will impact both semiconductor supply and demand.

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It was only three months ago that Gartner analysts predicted worldwide IT spending would reach $3.9 trillion in 2020, but due to the coronavirus outbreak, the global economy, supply chains, and both enterprise and consumer demand for technology products have been rocked to the core. 

The semiconductor market is no exception. On Thursday, the research agency released revised figures and estimates for how the global semiconductor industry will perform over this year from a previous prediction of 12.5% growth to a decline of 0.9%, a noticeable percentage change of 11.6 points.  

Overall revenue has also been reduced by $55 billion to $415.4 billion over 2020. 

"The widespread of COVID-19 across the world and the resulting strong actions by governments to contain the spread will have a far more severe impact on demand than initially predicted," said Richard Gordon, research practice vice president at Gartner. 

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A growth rate in the memory products segment of 13.9%, however, could prevent a full-scale collapse of the market as the world combats COVID-19.

Including flash memory and NAND products, Gartner says this area will likely achieve positive results due to the persistent supply problems experienced in 2019, which has kept prices stable and demand high. NAND memory, in particular, is expected to stay particularly strong with 40% annual growth. 

Over 2020, semiconductor memory is expected to account for 30% of total revenue, reaching $124.7 billion in 2020. Non-memory market revenue is anticipated to reach $290.6 billion, a year-over-year slump of 6.1%. The DRAM industry will decline by 2.4% over 2020.

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"Non-memory semiconductor markets will experience a significant reduction in smartphone, automobile, and consumer electronics production and be heavily impacted across the board," Gordon says. "In contrast, the hyperscale data center and communications infrastructure sectors will prove more resilient with the continued strategic investment required to support increased remote working and online access."

Earlier this month, Gartner released the results of a survey completed by Chief Financial Officers (CFOs) of enterprise companies and what they believe will be the working landscape after the COVID-19 crisis. 

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According to the research, 74% of CFOs believe many employees at their organizations once positioned in the office may end up telecommuting more often, and up to 20% of staff could be shifted to remote work on a permanent basis. 

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