February dip in China's chip market shows world what's coming

April 06, 2020 //By Peter Clarke
February dip in China's chip market shows world what's coming
The worldwide chip market grew in February, according to figures from the SIA, but a steep sequential drop in China's market is an indicator of a deep global decline to come

The steepness of the fall in China's market for chips is all the more significant because the SIA reports WSTS figures as the average of the nominal month and its two predecessors. The sequential fall is undoubtedly due to the Covid-19 epidemic and is likely to play out across all geographic regions in the months to come. It also looks likely to stifle what would have otherwise been a strong recovery from a weak 2019.

The three-month average February market in the America's region was up 14.2 percent year-on-year and most regions showed an annual increase. Despite its sequential fall China – which makes up about one third of the global market – was up 5.5 percent year-on-year. Sales increased year-to-year in Japan by 7.0 percent but were down in Asia Pacific/All Other (-0.1 percent) and Europe (-1.8 percent).

The overall result is that the three-month average global chip market in February was $34.50 billion down 2.4 percent compared with January 2020 but up 5.0 percent on February 2019. It now seems likely that the Covid-19 pandemic will produce an economic effect larger than the dot-com bubble in 2001 and the financial crisis of 2007-2008. The best hope is for a sharp V-shaped recovery.

Three-month average of chip sales by geographic region for February and January 2020. Source: SIA/WSTS.

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