TrendForce comprehensively analyzes the impact of the covid-19 outbreak on the global high-tech industry
The following analysis shows trendforce's survey of key components and other downstream technology industries under the impact of the covid-19 outbreak, as well as the latest data as of February 14, 2020.
Compared with the OSAT industry, the wafer factories in the manufacturing industry are more automated, so they are less affected by the epidemic. However, due to the fact that most of the workers in China's semiconductor manufacturing base are from other places, the labor shortage and traffic restrictions will cause the recovery rate of Fab generation plants to drop more than expected. In the short term, the utilization rate of wafer plants may not be fully recovered.
As a result, trendforce expects Chinese manufacturing shipments to decline in the first quarter of the 20th quarter, which could affect downstream Chinese OSAT companies. Compared with foundry and OSAT, ic substrate pcb designed fabless operation results in less demand for direct labor.
As a result, the IC design industry has not been affected by the outbreak like other semiconductor industries. In addition, in recent years, EDA and foundry have been expanding their cloud based design and validation environments.
In terms of supply, Samsung Semiconductor Xi'an factory, SK Hynix Wuxi factory, YMTC, CXMT, JHICC and other manufacturing bases of DRAM and NAND flash memory in China are not affected by the COVID-19, because the semiconductor factories is highly automated and the demand for manpower is very low.
In addition, the company has enough materials in stock before the Spring Festival to avoid short-term shortage. Finally, in terms of transportation, all semiconductor factories in China have national special licenses to transport their products to the whole country.
In addition, the client inventory still shows a shortage, and the purchase momentum of storage products will continue. Therefore, despite the outbreak, DRAM prices will continue to rise in the first quarter of 2020.
On the demand side, the outbreak of covid-19 has not yet had any significant impact on the overall server shipments, and PCB supply may only be delayed for two weeks.
Even so, the delay in PCB supply will have a limited impact on server shipments as manufacturers already have more stock in place before the New Year.
It is worth noting that China's data center industry has benefited from the outbreak. For example, because of the growth of distance education demand, Tencent's server demand has increased, while ByteDance also saw the growth of server demand due to the increase of its web application usage.
Panel manufacturers are currently maintaining the maximum wafer input for front-end arrays.
However, due to the outbreak of coronavirus, back-end module factories, downstream brands and ODM are facing great manufacturing uncertainty. The actual state of the restoration work is still unpredictable as the city is under shutdown management. Second, even if work is to be resumed, the epidemic has seriously affected domestic transportation and logistics. In terms of panel prices, we expect the TV panel to continue its upward trend from January. But panel prices for monitors and laptops face many uncertainties. They are expected to offer the same price in February as in January.
1. Optical communication industry
The most concentrated area in the optical fiber supply chain is Wuhan, Fiber fire house, YOFC and Accelink, etc., accounting for 25% of the global optical fiber production capacity. 5G base station has higher requirements on the quantity and quality of optical fiber. It is estimated that the demand of 5G optical fiber is twice that of 4G. China's 5G development plan is likely to be indirectly affected by the recent suspension of fiber supply due to quarantine and shut off in Wuhan.
The supply of IOT products will not be affected in the short term, because Huawei and other major Chinese manufacturers have resumed operations, and each link in the IOT supply chain can be highly replaced. But if the outbreak continues, some sectors will still be affected.
For example, the R & D business of Xiaomi and MediaTek has been suspended, leading to the postponement of the release of new products. Video monitoring companies Hikvision and Dahua Technology are shifting more production capacity to thermometer manufacturing.
3. 5G industry
Most of China Telecom's bidding, including 5g infrastructure construction and application demonstration purchase agreements, has been delayed. On the other hand, suppliers of key components for 5G base stations such as PCB and optical fiber are mostly located in Wuhan and other parts of Hubei. The outbreak is expected to have a negative impact on the 5G supply chain.
In the upstream substrate, chip to the downstream packaging, because of the limited number of LED manufacturers in Wuhan and Hubei core areas affected by the disaster, so few manufacturers affected.
LED manufacturers in other parts of China are hampered by the slow pace of recovery and may not be able to return to full production anytime soon. Overall, the LED industry has been oversupplied since 2019 and has inventories for sale, so the short-term impact is minimal.
2. Lithium-ion batteries
In terms of major lithium-ion battery applications, the production of power and non-battery components is diversified and mainly comes from Japan, South Korea and the United States.
For IT applications, the industry chain is highly concentrated in China, so they are by far the most affected by the outbreak.
3. The photovoltaic (pv)
According to trendforce, the coronavirus outbreak will cause the most damage to the supply of key equipment, such as modules and inverters. Many of the raw materials involved in module production, such as silicon wafers and other auxiliary materials, such as EVA, aluminum frame and glass, come from China's supply chain, which is now constrained by logistical problems. Some manufacturers can rely on their factories in Southeast Asia to produce modules and inverters, and from the current situation, all grid connected projects will be postponed to the third quarter of this year.
Consumer electronics and cars
1. Wearable devices
The products of smart watch, smart bracelet and TWS Bluetooth headset are mainly assembled in Guangdong, Jiangsu and Zhejiang. Although work is planned to resume in mid February, the shutdown, labor shortage and material shortage may still lead to a decline in production in the first quarter of 20 years, and the release of new products originally scheduled for 1h20 will be delayed. But in general, the peak season for wearable devices is 2h20, during which market leading devices, such as apple watch, will be released. Given that the outbreak will not continue in the second quarter of 2020, Trendforce remains neutral on global wearable device shipments this year.
As far as the Chinese market is concerned, wearable devices of Chinese brands are mainly sold at home. Therefore, compared with international brands, wearable devices of Chinese brands are expected to suffer more losses in the second half of this year.
2. Smart phones
Due to the high labor intensity of the smartphone supply chain, the epidemic has a relatively high impact on the smartphone industry. Smartphone Production is expected to fall 12% year-on-year in the 1 quarter of 20, making it the lowest quarter in the past five years. Due to the interconnection of the global economy, the outbreak in China has not only damaged China's GDP, but also the global economy as a whole, resulting in a decline in consumer purchasing power, which has brought difficult challenges to the entire smartphone industry. It is estimated that the output of smart phones will reach 1381 million in 2020, down 1.3% year on year, the lowest since 2016.
3. Laptop, LCD and LCD TV
The outbreak of coronavirus undoubtedly has the biggest impact on the downstream ODM and brands in the supply chain. After resuming production, the overall recovery rate of operators is very low. In addition, all types of materials and components are in short supply. As a result, productivity has plummeted. For TVs and displays, their manufacturing process and material requirements are similar. As a result, TV shipments are expected to fall to 46.6 million units in the first quarter, down from a previous forecast of 48.8 million units, due to the outbreak, according to trendforce, Shipments of monitors are expected to be reduced from previous forecasts (29 million units) to 27.5 million units. Assembling NB sets requires complex key components. At present, Nb battery, hinge and PCB are in short supply or out of stock.
4. Video game machine
Most of the assembly of the console takes place in China, and only a few processes are completed abroad. As a result, a shortage of domestic labor and materials has seriously damaged the manufacturing of consoles. However, most of the console sales take place in the fourth quarter, which means the peak season manufacturing of the console supply chain will take place in the second quarter of 2020. As a result, the first quarter was a season of weak sales. Assuming that the overall industrial impact of the outbreak of covid-19 can be fully addressed by the end of March, the second quarter can offset losses in the supply chain, thus limiting the impact on console supply.
Sales of Sony's PS4 and Microsoft's Xbox one plummeted in 2019 due to consumer expectations for the next-generation console to be released at the end of the year. Reduced demand means there is less chance of an outbreak leading to a stock shortage. At the same time, it was not until the second quarter of 2020 that the next generation of game consoles would be produced. Therefore, unless the outbreak continues, the new console will be released as scheduled. In the end, the impact of covid-19 on the video game industry in 2020 is at best negligible.
5. Smart speaker
The supply chain of smart speaker components covers Chongqing, Jiangsu, Zhejiang, Beijing, Shanghai and Guangdong, all of which are currently closed. Access to the area is strictly monitored. Under closure management, although some manufacturers resumed work on February 10, so far, people, goods and services have not been able to be transported freely. Due to the decline in production during the lunar new year, the shortage of labor and materials is expected to continue the traditional weak season, thus weakening the smart speaker shipments in the 20th quarter.
The covid-19 epidemic has reduced supply and demand in China's auto market, while the shutdown of Chinese parts factories has resulted in a shortage of materials for overseas auto manufacturers. Two major difficulties faced by suppliers in the Chinese auto market are downtime and uncertain recovery dates. But these problems are overshadowed by reduced demand. Due to the long process of car purchase and many trips to and from the dealer, once the buyer is unwilling to visit the dealer in person, sales will become almost impossible. It is expected that the sales volume of automobiles in China will drop 25-30% year on year in the second quarter.
The potential unavailability of materials is still the biggest risk factor that directly affects the automotive industry. Although automakers can make up for material shortages through overseas factories, capacity expansion and cargo transportation are expected to create gaps throughout the manufacturing process. According to trendforce, the shortage of supply from overseas automakers will temporarily affect market demand. However, after considering all segments, trendforce expects the global auto market to decline by 14% in the first quarter of 2020, the biggest decline in recent years.