Diverging Second Half Semiconductor Market Outlook: 'Challenging vs. Resilient'

[Asia Economy Reporter Changhwan Lee] The novel coronavirus infection (COVID-19) has dealt a severe blow to the global economy, and the semiconductor market is also experiencing negative impacts.

While the first quarter held up relatively well, analyses suggest that the outlook has become uncertain since the second quarter. However, there is also hope that if COVID-19 is quickly resolved and demand for server semiconductors increases due to the expansion of non-face-to-face activities, the industry will recover.

According to semiconductor market research firm DRAMeXchange on the 2nd, as of the end of last month, the spot price of DDR4 8Gb DRAM was recorded at $3.32.

The spot price of DDR4 8Gb DRAM, mainly used in PCs, steadily rose from $3.03 at the beginning of the year to $3.60 in early last month.

This was due to DRAM manufacturers reducing supply after last year's slump, coupled with increased server DRAM demand as remote work and video conferencing expanded amid COVID-19.

However, the situation reversed from mid-last month. The spot price of DDR4 8Gb DRAM has dropped more than 8% in the past 2 to 3 weeks. The industry views this as the semiconductor market beginning to feel the full impact of COVID-19.

It is analyzed that the recent semiconductor price changes reflect the significant spread of COVID-19 this month in North America and Europe, the largest markets for electronic products.

If COVID-19 continues beyond the second quarter, it is predicted that the semiconductor price weakness will persist.

However, if COVID-19 is quickly resolved, there is also a possibility that the industry will improve again. In particular, as non-face-to-face demand such as remote work and online education increases, server semiconductors are expected to lead an overall industry rebound.

KB Securities recently analyzed that the decline in semiconductor spot prices is mainly driven by consumer electronics such as PCs and TVs, excluding servers, and considering the possibility of increased fiscal spending for economic stimulus in countries worldwide, including North America, China, and Europe, where economic activities are expected to resume from May, concerns for the second half of the year are somewhat premature.

Researcher Dongwon Kim of KB Securities explained, "As of April, Samsung Electronics and SK Hynix's server DRAM demand is estimated to exceed supply by an average of 20%, indicating a continued supply shortage," adding, "The strong demand for server DRAM is due to changes in the untact business environment caused by COVID-19 (online video conferencing, remote work, etc.) and the rapid increase in internet data traffic from the expansion of OTT services, necessitating new server expansions."

He particularly forecasted, "The untact business environment changes caused by the COVID pandemic are likely to continue for the time being, so the increase in server DRAM demand will persist in the second half of the year."

This content was produced with the assistance of AI translation services.