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    SemiWEEK: The bright & dark sides of the Coronavirus; Stocks fell

      Andrea Lati
     6th-Apr-2020
    Description:

    Caution prevails as storm clouds continue to gather. Order activity for semiconductor equipment continued to trend lower, slipping to 57 degrees. Although the rate decline in order activity has moderated in the last two weeks the level of uncertainty among chipmakers and equipment suppliers is high. Equipment suppliers have not seen a significant reduction in demand yet; however, tool delivery in some areas has been challenging due to ongoing lockdown. Chipmakers’ visibility in the near term is fairly limited. The Chip Price Performance Index (CPPI) tumbled. I:B ratio is soaring as sales are falling faster than inventories. Semiconductor sales slowed significantly last week as logistics issues from COVID-19 slowed OEM shipment levels. It also re-infected the 1Q20/1Q19 Semiconductor Nowcast. DRAM, NAND, Logic, Auto, Analog & Power IC sales were all below 2019. Semiconductor Sales Nowcast: 1Q20/1Q19 Slipped to +3%. Semiconductor Weather1 Report: 61˚ F. Warmed from Cold to Chilly. IC Supply-Demand2 Metrics: Saturated. Electronics Pricing Trend: Rising. Notebooks, Smartphones, and Consumer Electronics have a seasonal inversion driven by WAHE (Work-at-Home Economy). Coronavirus has had a deep negative impact on Integrated Circuit sales. Strategy and Tactics: The bright & dark sides of the Coronavirus. 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. VLSI's Semiconductor Stock Indices returned to negative territory along with the market following the March jobs report missed expectations. Semiconductors -2%, Equipment -7%, EDA 1%, Electronic Materials -5%. VLSI’s Semiconductor Stock Index gave back 1.6% despite claiming 5 of the top 6 stocks. VLSI’s Semiconductor Equipment Stock Index plunged 6.7% with all companies finishing in the negative. VLSI’s EDA Stock Index was led up 1.4% by Cadence. VLSI’s Electronics Materials Stock Index fell 5.3%, SOITEC came out on top. Hottest Stocks: MagnaChip Semiconductor, Xilinx, SOITEC, Kingpak Technology, Intel, and Max Linear.

    Views: 2013
    Domain: Electronics
    Category: Semiconductors