Issue link: https://iconnect007.uberflip.com/i/1236528
98 PCB007 MAGAZINE I APRIL 2020 Asia Semiconductor Supply Chain Impacts In Asia, the semiconductor supply chain is working to overcome intractable challenges caused by COVID-19, including sourcing raw materials for chip manufacturing and main- taining assembly and test operations, Mark Pa- tel—senior partner and semiconductor practice lead, McKinsey & Company—said at the webi- nar. Those problems cascade to foundries and IDMs even as they confront the compounding issue of a shortage of fabrication operators and engineers. Downstream, the inability to pack- age, test, and qualify product risks exacerbat- ing the supply constraints. Patel said another acute challenge is that most semiconductor manufacturers and sup- pliers are operating under restricted practic- es, making it harder to sustain engineering activities vital to new product introductions, new process development, and capital equip- ment expansion. In the longer term, the supply chain fallout holds implications for product life cycles and investments in capacity and next- generation technology—factors that analysts will need to monitor in evaluating the econom- ic impact. Returning Workers Key to Economic Recovery Issuing shelter-in-place orders have been an effective antidote to the spread of COVID-19, but a double-edged sword as nations world- wide sustain the economic blowback. Dis- cretionary consumer spending on items such as automobiles has dropped by 45% global- ly so far this year, business investment has fallen, and trade has seen a sharp slowdown, said Sven Smit—chairman and director at the McKinsey Global Institute—speaking at the webinar. A lockdown for as little as a month can slash aggregate global GDP by as much as 10%— a scenario McKinsey expects to play out in the second quarter of 2020. The drop would be the deepest since World War II and larg- er than the plunge in the first quarter of the Great Depression, raising the question of how long governments can afford to keep workers holed up at home. "The economic shock is unprecedented," Smit said. "We've never sent people home to not work. Even in World War II, next to the front lines, people were harvesting food." China offers a potential blueprint for eco- nomic recovery. McKinsey estimates that Chi- na's rigorous containment efforts could help its economy bounce back in as little as six months—a V-shaped rebound. Western na- tions generally have not been as forceful with their containment measures. For them, the fight against the pathogen could be prolonged, deepening the economic damage. Yet, even with the best protective lockdowns, a new challenge arises: The longer shelter-in- place orders remain in effect to contain the spread of the virus, the longer the economic impact drags on. "Until the path to return to work becomes clearer, people will not be con- fident to spend," Smit said. Confronted with that reality, governments worldwide must strike the delicate balance be- tween safeguarding the lives of people—criti- cal forces of economic growth through con- sumer spending—and limiting the economic shock. The faster the virus can be brought to heel, the softer the impact on economies around the world. And the stronger the return- to-work protocols in place once COVID-19 has been brought under control, the faster workers can get back to their jobs. Smit believes resolving both issues simulta- neously is not only possible but necessary for a return to normalcy. "That's the imperative of our time," he said. This story was originally published as a SEMI blog by Michael Hall. Michael Hall is a marketing communications manager at SEMI.