Top 5 Predictions of the 2021 Electronics Market | Symmetry Blog
1. What surprised you about the 2020 semiconductor market?
The obvious “surprise” this past year has been how well the semiconductor business, and by extension, the electronics market did overall despite the massive disruption of the COVID-19 pandemic. In hindsight, this is actually not very surprising, as aside from timing and logistics snags that COVID caused in the semiconductor supply chain (and virtually all other supply chains), the pandemic has proven to be an accelerator of technology trends that were already well established prior to the start of 2020.
This past year, technology acted as our savior in many ways. It enabled the quick shift of hundreds of thousands of people to begin working from home and kept the industrial sector humming along. It also enabled a rapid pharmacological response to the new coronavirus. Within weeks of its identification, the virus genome had been sequenced and shared with big pharma and universities around the world. Additionally, supercomputing and AI went to work to quickly cycle through compiled data and the molecular combinations of countless compounds to identify mechanisms for both treating and preventing the disease. In record time, we have had multiple, extremely effective vaccines being manufactured and delivered at scale, none of which would have been possible without recent technological innovations. At the heart of it all, or maybe at the brains of it all…there are semiconductors making it all possible.
2. What were the causes of extended lead times across most semiconductor suppliers throughout 2020?
One of the consequences of the sudden onset of COVID-19 was that cap ex spending around the world was throttled back and inventories were dialed down, including throughout the electronic components industry. This was a perfectly logical and predictable response to the uncertainty that the virus introduced. But many end markets missed that memo and by third quarter were in catch-up mode, and by fourth quarter were in growth mode.
At Symmetry Electronics, and throughout the TTI Family of Companies that Symmetry is a part of, we have experienced this rebound and acceleration firsthand. December was a record setting month for us, both on a shipping basis and a new order basis, and despite the well-publicized headwinds, the company finished ahead of 2019.
This uptick in demand on top of stagnant capacity expansion and reduced inventory levels has pushed out lead times on a great many electronic components; including core semiconductor product families ranging from MOSFETs and memory, to microprocessors. As usually happens in these situations, end users quickly transitioned from being cautious buyers to aggressive buyers, thus further inflating lead times. As a result of solid end market demand and some hedge buying, I expect things to be tight in the component supply chain straight through the first half of 2021 and possibly beyond.
3. What are the ramifications of continued COVID-19 restrictions going into 2021?
The only real COVID related ramification I see for 2021 is some softening in demand for medical equipment associated with the virus. As we get on the other side of this pandemic, the reactive build out of things like ventilators will subside. However, any downside will be more than offset by trends in things like contactless electronics and virtual reality, and will be propelled by the exponentially growing need for bandwidth, signal speed, storage and processing power. All of these things are powerful, long-term drivers of our business industry.
4. Assuming the incoming U.S. administration takes a softer stance on trade, how will this affect the semiconductor market?
I don’t believe this is going to be the case; at least as far as China is concerned. The underlying issues behind the trade war that began in 2018 are non-partisan and largely unresolved. While I do think some change in tactics is likely, and warranted, I don’t think the new administration is going to retreat from addressing these problems.
However, I have come to believe that there is actually something much more serious going on here; something that could have a significant impact on the semiconductor market. As we move into the 2020’s, it is becoming increasingly more apparent that we are in fact in a tech war with China and that tariffs are, in reality, simply a weapon in that war. This has far reaching ramifications for our economies, the balance of power between our nations, and even ultimately our quality of life. This is something that everyone should be concerned about, whether they work in technology or not.
While I feel strongly that all people should put loyalty to their country first (whether native or adopted), I don’t believe that it is good for any of us to take that to a nationalistic/isolationistic extreme where the only acceptable outcome is a win-lose result. The world is becoming more connected and global by the second thanks to the internet and other communication and travel technologies, and I for one find a lot of promise, opportunity, and hope in that development. After all, many of the threats we have to contend with (pandemics, global warming, rising sea levels, meteor strikes, etc.) are equal opportunity disrupters. They don’t see, care about, or respect country boards, forms of government, or ideologies. These are big things that we would all be better off working on together, collaboratively.
By definition, anything called a “war” is win-lose and what we really need more than ever is a lot more global-scale, win-win.
5. What market segments are primed for growth in the post-COVID era? What market segments are “pandemic proof”?
Anything not heavily dependent on close quarters and heavy person-to-person interaction proved to be pretty pandemic proof in 2020, and I expect will remain so going forward. But this leaves a number of large and important parts of our economy (the service sector, travel, and entertainment, to name a few) in a world of hurt that can’t begin to resolve itself until COVID-19 is eliminated around the world. Back to my globalization theme–if our country is the only one that is inoculated against the virus, the massive piece of our economy and supply chains that is tied to other countries remains deflated and our economy won’t be able to reach its full potential.
Setting the virus factor aside, it is very clear to me that things like 5G, energy infrastructure (especially renewable energy), the electrification of transportation (EoT), edge and cloud computing, and the ongoing proliferation of the Internet of Things concept, are going to drive our industry to set new record after new record for at least the rest of this decade. The best is yet ahead for the electronics industry, and by extension, the electronic component industry and the semiconductor industry–and by further extension, Symmetry, and the entire TTI Family of Companies. That is not wishful or aspirational thinking; it is pure logic based upon the fundamental trends and forces of technology.
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