Omdia Reports Devastating Impact of Covid-19 on Automotive Power Semiconductor Market
The Covid-19 pandemic is hitting automotive power semiconductor revenue hard in 2020, with the market expected to drop by 16% due to plummeting vehicle sales and production cuts, according to a report from Omdia.
Power semiconductor revenue from automotive applications is forecasted to fall to $9.1 billion in 2020, down from $10.8 billion in 2019. Kevin Anderson, who leads power, automotive, and industrial semiconductors at Omdia, explained that 2020 was anticipated to be a year of recovery for this market. However, the pandemic forced most automotive assembly plants to shut down for several weeks—first in China, then worldwide. Meanwhile, demand for new vehicles also took a hit as dealerships closed and many people faced job losses and pay cuts.
Even the plants that have reopened aren’t running at full capacity, thanks to component shortages and reduced staffing to maintain physical distancing. Consequently, it’s predicted that fewer than 70 million new vehicles will be built in 2020, which is over a 20% drop from 2019.
Automotive electronics heavily rely on power semiconductor devices like discretes, modules, and ICs. This broad use has driven strong annual growth in recent years. However, the market took a turn in 2019 due to trade tensions, on-and-off tariff negotiations, and economic downturns in some regions, leading to a 1% decline from 2018.
Discrete power semiconductors and power ICs saw low single-digit declines in 2019 and are now expected to face revenue losses of 17% this year. Despite their extensive use in vehicle electronic systems, reduced vehicle production has significantly impacted their revenue.
Power module revenues grew by 7% in 2019, bolstered by higher manufacturing volumes of electric vehicles (EVs) and hybrid EVs (HEVs). This year, power module revenue is expected to drop by only 8%.
Different areas within the automotive domain are experiencing varied impacts. Revenue from the fast-growing ADAS (advanced driver-assistance systems) module market increased by 12% in 2019 and is projected to fall by only 3% in 2020. In contrast, powertrain system revenue, which grew by 1% in 2019, is expected to decline by 13% this year.
The market’s shift to HEV and EV production should lead to increased sales of high-value power modules. Other segments like body and convenience, chassis and safety, and infotainment saw mid-single-digit growth in 2019 but are anticipated to decline by high-teens to low-20s percentages in 2020.
As major economies start to reopen after the lockdowns, a gradual sales recovery is expected in the second half of 2020. If a significant second wave of Covid-19 is avoided and if a vaccine or better treatments are available by early 2021, vehicle sales could bounce back that year. This would likely result in a power semiconductor sales increase of around 25% in 2021 and an average yearly growth rate of 7% from 2019 to 2025.
