The latest report from DMASS shows a downturn in the European semiconductor business across Europe in Q2 and directly links the fall of over 20% to the effects of the global pandemic and ensuing lockdown. The report records a fall in sales of 20.7% to €1.82bn in Q2 compared to the first three months of 2020.

The fall was feared earlier in the year. “The COVID-19 pandemic and its economic aftermath, starting across Europe in February and March, hit the electronics industry with full force in the second quarter,” said Georg Steinberger, chairman of DMASS. The ensuing manufacturing shutdown, combined with economic uncertainties among consumers and companies and lack of supply chain visibility drove many customers to “step on the ordering brake and led to a lot of pushouts on existing orders,” he said. As for the next phase, that is uncertain too. “We do not really know what will come at us in the second half of 2020 – rally or rafting,” he said.

The gloom is fairly evenly spread across Europe, with all by Ireland, the Netherlans, Austria and Russia experiencing a double-digit decline, says the report. The largest fall was in the Nordic countries (-33.2%) and Eastern Europe (-30.6%), followed by the UK, which saw a 23.6% fall, Germany (-21.6%) and France (-21.4%). Italy recorded a fall of 19.3% in the period.

Steinberger summed up the landscape thus: “It is almost impossible to find anything positive or less negative in Q2, but clearly countries that are predominantly contract manufacturing-driven suffered most.”

In terms of product types, design-oriented and exclusive products declined less than standard products. The report breaks this down as memories were hardest hit, falling 32.4%, followed by standard discretes which fell by 31.4%, followed by discrete power (-23.5%) and analogue products (-22%). Opto products saw a 17.1% drop and MOS micro fell 15.3%. The logic market, divided into standard, programmable and other fared ‘less badly’ as a sector with standard logic falling by 18.2%, programmable logic declining by 12.8% and other logic seeing a fall of 14.5% between Q1 and Q2.

There are other economic and logistic factors at play, albeit to a lesser extend that the corona virus, observes Steinberger. “Besides Covid-19, you also see some special effects of product categories slowly deteriorating [legacy technologies like SRAMs and EEPROMs] or disappearing from distribution as an effect of suppliers taking some business direct, like DSPs,” he says.  “However, the fact that standard products are suffering more than expensive specialties is strange, as the financial risk on the customer side is rather low. We will see how this pushback on standard products develops, once the market turns around.”

Steinberger calls for a reassessment by the industry of how it operates. “It is clear that resources become scarcer and the throwaway mentality of the last 50 years will lead to disaster. Technology can play a major part in recreating a sustainable world, but as we can see by its interrupted supply chain, it is also part of the current problem. The big question is: how can the significant influence of technology be used to make changes to a sustainable better world?”