Global chip market starts year solid, faces economic threats

March 03, 2020 // By Peter Clarke
Global chip market starts year solid, faces economic threats
In January 2020, the global chip market was essentially flat compared with a year before, having unwound a year of declines just in time to face the emerging threat of coronavirus Covid-19 and continued global trade tension.

Year-on-year market increases in China and the Americas almost totally compensated for 5 percent market declines in Europe, Japan and Asia-Pacific excluding Japan and China, according to the Semiconductor Industry Association (SIA) reporting World Semiconductor Trade Statistics (WSTS) figures.

As a result, the three-month average global chip market in January was $35.39 billion down 2.2 percent compared with December and down 0.3 percent on January 2019. While the recovery would normally signify a return to growth in the following year, in 2020 there is currently uncertainty about how the spread of Covid-19 will affect the global economy.

Covid-19 could produce an effect similar to, or larger than, the dot-com bubble bursting in 2001 and the financial crisis of 2007-2008.

Evidence of the return to growth could be seen in the China market, which recorded averaged January sales total of $12.23 billion, up 5.2 percent on January 2019. Because sales figures are averaged over a given month and its two predecessors the impact of Covid-19 will feed in gradually over the next few months.

Three-month average of chip sales by geographic region for January 2020 and December 2019. Source: SIA/WSTS.

"The global semiconductor market got off to a solid start in 2020, with the industry nearly posting positive year-to-year sales growth for the first time in more than a year," said John Neuffer, CEO of SIA, in a statement. "Still, the global market faces significant macroeconomic headwinds, including global trade unrest and ongoing concerns about worldwide spread of the coronavirus, which could limit continued market recovery."

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