The number of people with Covid-19, the current incarnation of the coronavirus, remains proportionally small. However, keeping it that way requires draconian controls over the movement of goods and people, and that will have a significant impact on demand for electronics, and (thus) the semiconductor industry.
Enterprise demand won’t change much – orders might take longer to fulfil, but slower spending in the first half of the year will result in higher spending toward the end (once the coronavirus is under control), so over the year the change will be minimal. Consumer spending is slightly more volatile, and some of the first-half dip won’t be regained before the end of the year (if ever). China’s economic growth will slow slightly more than anticipated, but the percentages are quite small.
At Gartner we were already forecasting a seasonal drop in semiconductor revenue for the start of 2020, but we’ve now revised our numbers to take into account the impact of Covid-19.
Hardest hit will be the smartphone business, which is only going to grow by 2.6% in 2020, rather than the 4.9% we had anticipated. Sales in China will be particularly bad, thanks to closed shops and nervous shoppers. We should expect to see any failure in uptake of 5G to be blamed on the virus, but with few 5G handsets on the shelves as yet the impact will be small.
It’s not all bad: in cloud computing we’re seeing more demand, as video conferencing and remote working become more popular than ever. China has never had a history of remote working, but the threat of infection is a powerful incentive and we expect the gains in home working to be sustained beyond the current epidemic.
Robotic delivery companies are ramping up and meet the needs of customers who don’t want to venture outside (and not just wine-by-drone services for the excessively rich). The short-term nature of Covid-19 (which we expect to be under control within a couple of months) will prevent those companies taking full advantage, but some increased uptake should be expected.
On Tuesday February 18 the Gartner semiconductor team will be presenting more details on the impact of Covid-19 at a Webinar open to Gartner customers. The Webinar will be presented twice, once in Mandarin and a second time in English, please follow the links to register.
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