Editor's comment: Can the electronics industry break the cycle?...

Author : Mark Gradwell | Editor | EPDT

02 September 2020

Mark Gradwell, Editor, EPDT

As the coronavirus pandemic rumbles on, its impact is being felt across every facet of our lives – and that includes the electronics industry. Despite the success & growth of smart technologies & ubiquitous connectivity, as well as emergent mega-trends from IoT, 5G & AI to autonomous & electric vehicles, the electronics industry can still expect to feel the hit to the economy from COVID-19 – with a consensus of industry studies & data backing that up…

This editorial was originally featured in the September 2020 issue of EPDT magazine [read the digital issue]. Sign up to receive your own copy each month.

The latest is a report from industry body, DMASS (Distributors’ & Manufacturers’ Association of Semiconductor Specialists), which shows a substantial drop in European semiconductor distribution revenues for Q2 of -20.7% to €1.82 billion. DMASS note that a mix of market- and pandemic-driven uncertainties in Q1 turned into a very real directly COVID-19 and lockdown-related downturn during Q2.

Georg Steinberger, Chairman of DMASS commented: “As feared, the COVID-19 pandemic and its economic aftermath, starting across Europe in February and March, hit the electronics industry with full force in Q2. Manufacturing shutdowns, economic uncertainties among consumers and companies, and lack of supply chain visibility drove many customers to step on the ordering brake and led to pushouts on existing orders.

At a country/regional level, the situation was equally bad across the board, with virtually all major regions and markets experiencing double-digit decline (except Ireland, Netherlands, Austria and Russia): Germany was down by 21.6% to €528 million; Italy ended at -19.3% & €161 million; France at -21.4% & €121 million; the UK at -23.6% & €119 million; Eastern Europe at a staggering -30.6% & €279 million; and the Nordic countries at -33.2% & €138 million. Countries that are predominantly contract manufacturing-driven suffered the most.

Recent data from electronics industry trade association, ecsn (Electronic Components Supply Network) backed up this gloomy picture, revealing a -10.3% decline for UK & Ireland electronic components market in the first half of 2020 – and even though its updated mid-year forecast predicts the market decline will slow in the second half of the year, its forecast for the full year is still in the -6% to -10% range. Research & consulting firm, McKinsey have forecast a full year 2020 semiconductor revenue decline of -5% to -15%, while market intelligence firm, IDC have estimated an almost 80% chance of significant contraction in worldwide semiconductor revenues in 2020, with the most likely outcome a decline of -6%.

DMASS’ Steinberger thinks 2020 will be a year of significant double-digit decline, “whether we like it or not”. But he also believes: “It could, no, should be the beginning of a reassessment of how we operate as an industry and at a larger scale, as society in general. It is clear that resources become scarcer and the throwaway mentality of the last 50 years will lead to disaster. Technology can play a major part in recreating a sustainable world, but as we can see by its interrupted supply chain, it is also part of the current problem. The big question is: how can the significant influence of technology be used to make changes to a sustainable better world?

It’s refreshing to hear an industry leader question the role that our industry could potentially play in creating a more sustainable and circular economy!

EPDT September’s issue also contains features on Displays technologies & Energy applications, plus EPDT’s regular Electronics Outsourcing supplement. Read more on what's inside EPDT this month...

Mark Gradwell
EPDT Editor


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