Top of mind these days is the COVID-19 coronavirus and its impact on those poor souls affected – it is a humanitarian crisis above all else, of course – but also the impact on the economy, travel and other aspects of business.
The impact so far on the semiconductor industry has fortunately been minor. A recent report (February 18th) from Omdia notes that, despite facing logistical, packaging and test challenges related to the coronavirus, semiconductor fabs located in China are continuing to function normally, with high capacity rates.
“Global chip supply through the first two months of 2020 appears to be largely unaffected by the coronavirus outbreak,” said Len Jelinek, research vice president, components & devices, for Omdia. “There’s plenty of chip inventory in the channel, compensating for any coronavirus-related production shortfalls at semiconductor fabs located in the Wuhan area and elsewhere in China. Also, few semiconductor suppliers are located in areas affected by the virus, and all of the parts sold by these companies can easily be sourced from other chipmakers.”
The real danger for the semiconductor industry lies elsewhere, the report continues, as the coronavirus disrupts production at electronic manufacturing companies that represent some of the world’s largest semiconductor purchasers.
“With electronic manufacturing services (EMS) and original design manufacturing (ODM) companies facing challenges regarding the number of workers returning from the Lunar New Year closings, the global market will face serious challenges as it enters the second quarter,” Jelinek said. “China is a major center for manufacturing services, with organizations including Foxconn basing massive factories in the country. These companies represent major purchasers of semiconductors, accounting for 29 percent of global purchasing this year.”
Major EMS/ODM operations in the region include Foxconn’s iPhone production operations, located about 300 miles from Wuhan in Zhengzhou. This plant is open and running—but only at about 10 to 20 percent of capacity due to workforce issues. Other EMS/ODM operations in the area, including those run by Jabil and Wistron, are also suffering workplace issues, but these don’t have the major impact on the semiconductor demand that Foxconn does.
If there is one advantage to working in a semiconductor fab, it is they are inherently clean and highly automated, yielding an environment that’s not conducive to the spread of disease. Foundries such as SMIC, TSMC and UMC, for example, have been able to maintain normal production conditions without any changes. Capacity utilization rates at these fabs remain high.
The coronavirus threat is also impacting trade shows and conferences, of course. SEMI rescheduled SEMICON China to June 27-29, 2020 and SEMICON Southeast Asia to August 11-13, 2020 and cancelled the SEMICON Korea altogether (the next one will be Feb. 3-5, 2021). SEMI’s website has updates on these and other SEMI events. The 2020 IEEE International Reliability Physics Symposium (IRPS) will be presented online as a virtual conference. This works out well for me, since I’ve always wanted to go and never been able to.
I suspect that there will be a paradigm shift in the way business is done, but at least telecommuting and attending virtual conferences is an option for many, thanks to the electronics industry. The semiconductor industry has also enabled many advances in the medical field, including the use of AI, that I’m sure will be brought to bear on the fight against the coronavirus and the race for a cure. Stay safe, everyone!
Note: Readers may also be interested in this rather sobering McKinsey report: COVID-19: Implications for business
