Covid-19 cuts just 3% off Omdia's 2020 chip growth forecast

May 04, 2020 //By Peter Clarke
Covid-19 cuts just 3% off Omdia's 2020 chip growth forecast
The global market for semiconductors will grow 2.5 percent in 2020, according to market analysis firm Omdia, this is a drop from the previous Omdia forecast of 5.5 percent.

Omdia takes a different view to International Data Corp which said in March that 2020 will probably be a second year running of global market decline, with the most likely outcome being a contraction of between 3 and 6 percent ( How Covid-19 will impact the 2020 global chip market ).

Omdia said the Covid-19 crisis will undercut growth in a number of sectors but boost growth in areas such as industrial and medical electronics. Strength in the memory market will compensate for an overall crash in logic and other semiconductor type.

The net result is that the chip market will be worth $439.3 billion in 2020, up 2.5 percent from $428.5 billion in 2019, according to Omdia. However, the market excluding memory ICs will fall by 5 percent.

Global chip market revenue forecast, 2019 to 2024 (US$ millions). Source: Omdia.

Going forward Omdia predicts a modest recovery bounce in 2021 of 14 percent followed by two or three years of stagnation.

"Omdia has cut its semiconductor forecast substantially as the ramifications of the coronavirus on the global economy have come into sharper focus," said Myson Robles-Bruce, a research analyst at Omdia, in a statement. "With Japan already in recession and economists expecting the US and Europe to enter recessions in the second quarter, demand is weak in every region and almost every market. The pandemic has negatively impacted supply chains and market demand across all component categories."

The wireless segment is a major factor behind the weak market conditions this year, with market revenue for wireless equipment set to decline by 4.7 percent compared to 2019. This has prompted Omdia to cut its growth forecast for wireless chips to 2 percent, down from 4.8 percent previously. 

Global chip market revenue growth excluding memory, 2018 to 2024. Source: Omdia.

"The outbreak of Coronavirus will negatively impact the smartphone market in 2020,” Robles-Bruce said. “The modest growth of 2.4 percent predicted

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