March 27, 2020 — Strategy and Tactics:The bright & dark sides of the Coronavirus WildPhotons: Probably the most important thing is having good fundamentals ...
G. Dan Hutcheson
The bright side of the Coronavirus:Chip makers have been working hard as ever to come out of the COVID-19 storm gaining market share. What is good about this is it can generally be expected that semiconductor manufacturers will keep Capital Expenditures going for technology upgrades for new nodes, and even capacity expansions where they see growth opportunities. Chipmaker responses to the Coronavirus was to aggressively... Meanwhile, TSMC Taiwan started ... SMIC and other Chinese companies in the semiconductor industry were quickly propped up by the China Big Fund. The backdrop to this is a government in China that sees semiconductor self-sufficiency as essential to its future. Outside of China, wafer fabs around the world are running at utilization rates similar to normal times that would be expected for this year back in early January.
Macroeconomics and the WAHE restructuring: The Coronavirus has had an unprecedented impact everywhere in a way that hasn't been seen since Pearl Harbor with its forced restructuring of business to a Work-At-Home Economy (WAHE, pronounced like the words 'Way' and 'Whey'). WAHE will be to the post-Coronavirus world what the Auto was to the post-WWII and the second half of the twentieth century.
The dark side of the Coronavirus:
The business and macroeconomic issue can be framed by China's experience, where general utilization dropped below 50% with the shutdown. Since then, it increased back to normal levels for semiconductor, as well as for other factories. However, consumers have not returned to normal patterns... Another macroeconomic problem facing China's factories and economy is that the rest of the world is well behind them in recovering from the Coronavirus.
Supply Chain constraints: If you're a semiconductor equipment or materials supplier, there are two constraints affecting delivery to customers and demand is not currently one of them. One is in the 2nd and 3rd tiers of critical subsystem suppliers and the other is in logistics... Supply Chain strategy had shifted from Just-in-Time to Just-in-Case, creating new problems.
Important ChipChirpsTM VLSI's Semiconductor Analytics report: Coronavirus Semiconductor Sales Watch... ChipChirpsTM are short notifications from VLSI's analysts to alert clients about breaking news and events. They are exclusively available on VLSI's App for Android and iOS: