mof-semiconductor © Ameloot group

The COVID-19 crisis has caused serious downturns in the chip industry around the globe. But “semiconductor companies that begin revising their long-term strategies now may emerge stronger in the next normal”, McKinsey concludes in a report on the future of the industry. To be successful, these companies should “should embrace uncertainty”.

In the months after the coronavirus began to spread, semiconductor companies moved decisively to protect employees, secure supply chains, and address other pressing concerns, McKinsey says. “Although the situation is still serious and many governments are still imposing physical-distancing requirements, semiconductor leaders are now looking ahead to the time when the pandemic abates and the next normal begins.”

These steps should not only include building a solid baseline for their company, “but also creating multiple future scenarios, each showing different macroeconomic and virus-related outcomes, as they set their strategy for the coming years. They should embrace the uncertainty as part of their operating model since agility and the ability to adapt quickly will be far more important than sticking to a plan.”

Subscribe to our Newsletter!

Your weekly innovation overview Every sunday the best articles of the week in your inbox.

    the more optimistic scenario

    McKinsey’s analysis is based on assumptions in two of the nine scenarios that were developed for the COVID-19 recovery, both of which assume that the spread of the coronavirus is eventually controlled and catastrophic economic damage is avoided. In the first scenario (picture above), global gross domestic product (GDP) recovers in the fourth quarter of 2020. In the second (picture below), recovery is delayed until late 2022.

    the less optimistic scenario

    Trends in PCs, automotive and wired communication, stand out, McKinsey says. The PC segment will see the sharpest drop in demand and the performance gap will become more serious over time. “Most people will buy all the home-office electronics that they need for remote work in 2020, lowering demand for next year.” In the more optimistic recovery scenario, the automotive segment sees year-on-year growth of 28 to 36 percent in 2021. “This estimate is based on the assumption that governments will offer incentives to car buyers.” Growth in the segment of wired communication could even exceed pre-COVID-19 forecasts in both 2020 and 2021. “This is one of the few areas where a delayed recovery would actually
    contribute to higher growth than the more optimistic scenario, since continued remote work and homeschooling will stimulate demand for wired communication.”

    As in previous downturns, McKinsey says, “those semiconductor
    companies that act quickly could emerge stronger.” This can be done through modest cost-cutting, a focus on R&D innovation, and a programmatic approach to mergers and acquisitions.

    Read the whole report here

    Support us!

    Innovation Origins is an independent news platform that has an unconventional revenue model. We are sponsored by companies that support our mission: to spread the story of innovation. Read more.

    At Innovation Origins, you can always read our articles for free. We want to keep it that way. Have you enjoyed our articles so much that you want support our mission? Then use the button below:


    Personal Info

    About the author

    Author profile picture Bart Brouwers is co-founder and co-owner of Media52 BV, the publisher of