The COVID-19 epidemic has progressively spread and despite the continuation of work in China, the proportion of personnel returning to the production lines remains low. As stated by insiders of the trade, although the domestic demand market in China is huge, staff cannot return to work as usual or work overtime and, therefore, a sudden decrease in income is experienced. Since the additional challenge that people don’t even go outside, this has further weakened the power of consumption. As viewed, the challenges experienced since the epidemic began will result in a vicious circle for the technology industry with the risk that "the most grim and harsh conditions have not emanated yet".
 

    The COVID-19 epidemic has also affected China’s semiconductor supply chain. Essentially, heavy-weight analysts that are familiar with the semiconductor industry in China have suggested that although China plans to reduce its restrictions on the resumption of work in the near future, the spread of the epidemic has resulted in a sudden drop in domestic consumption in China. Besides, the supplies of many components have suffered from the impacted supply chain effect and it has severely affected the local semiconductor supply chains, as well as the global economy. As a consequence, it is projected that orders will be affected and a decreasing trend is likely in the second quarter.

 

    Zhao, Hai-Jun, the co-chief CEO of SMIC that is a leading foundry in China, recently warned that although the current production capacity of SMIC in Shanghai, Beijing, and Tianjin remain within full capacity, the most severe situations are still to come. More importantly, the impact is expected to increase slowly in the second quarter of 2020.

    Trendforce, a technology market research agency, showed that since most of the main semiconductor towns in China are mostly from abroad, the labor gap and traffic restrictions in the wafer foundry should reduce the resumption rate of work to be lower than estimated. Consequently, the capacity utilization rate is considered to not return to normal in the short term.

    Trendforce also projects that the overall shipments from Chinese foundry manufacturers may be decreased in the first quarter since the current epidemic situation has not yet been effectively controlled and it should, as a whole, affect the downstream Chinese packaging and testing companies. Regarding the IC design, since the direct labor needed is much lower than that of the foundry, packaging, and testing industry as it does not have any production plants, the impact on the IC design industry is expected to be much smaller.

 

 

    Since 2020 is the crucial year for 5G to prosper worldwide, it is reasonable to consider that the market demands remain steady, however, they have also been postponed as a result of the current situation. However, if the COVID-19 epidemic cannot be relieved, it would then take a longer period to use up the stock. As observed, this should result in the downturn of the business climate regarding the technology industry in the first half of the year and affect the performance in the second half of the year. (News source: Economic Daily News)