The COVID-19 outbreak is now travelling around the world, leaving a trail of destruction in its wake. Inevitably the virus has had an effect on leading companies in the semiconductors sector.

In the space of three months, the backdrop for the semiconductor sector has changed, but long-term issues remain and must be solved. The industry entered 2020 amid slowing global economic growth, the rancor of the US-China trade war, a desire to shift the global supply chain away from dependence on China, and a flat sales picture for its two biggest customers: smartphone manufacturers and laptop suppliers.

The COVID-19 pandemic will shrink worldwide end-user demand for everyday products powered by semiconductors. COVID-19’s impact also means much of the industry is only operating at about 50% capacity, though China is moving again. At the same time, the global supply chain has stalled, exacerbated by COVID-19-related border checks that could last for months.

The good news is that, on the supply side, the manufacturing operations of China-based dynamic random access memory (DRAM) and flash memory plants have been largely unaffected, as highly automated semiconductor fabrication plants need little manpower.

COVID-19 has triggered surging demand among millions of people worldwide for online services and apps but, so far, there has been little disturbance to the supply of extra servers for China’s data centers.

Despite the pressing concerns facing the rest of the world, the thinking at the design centers of the leading semiconductor companies, and the captive semiconductor operations of Apple, Huawei, Google, Amazon, and Alibaba, remains long-term, up to five years ahead, and designers can use cloud-based services. By then, China’s currently weak semiconductor industry will have grown to become a challenging competitor for the US.