COVID-19 has caused a rapid, unprecedented impact to the semiconductor industry driven by a dramatic shift in consumption. This has created business continuity uncertainty. As semiconductor companies look to stabilize and re-emerge, they should use a three phased approach focused on: Resilience, Recovery and the New Reality.
- Semiconductor companies are typically better positioned compared to others from a liquidity perspective, but revenue declines are expected and may impact investment levels in key areas. Semiconductor companies with low Cash/OpEx could experience a cash crunch in <45 days of a major revenue or cash flow contraction
- Even semiconductor companies not experiencing immediate disruption must look ahead, as disruption to their customers and their partner ecosystems will have ripple effects across many end markets
- According to the KPMG Global Semiconductor Leadership Survey, a majority of executives expect a ~10% revenue decline for 2020. ~90% of leaders believe revenue will recover within 2 quarters after economy reopens
- Recovery is expected be uneven across end markets and geographies: Automotive and Consumer may face the biggest headwinds with Data Processing as one of the lone bright spots in the short term
- To compensate, semiconductor companies need to take immediate actions, such as enabling remote work force, mitigating supply chain risks, optimizing working capital, and reducing capex and discretionary spend
