COVID-19 What is the impact of COVID-19 on the power electronics industry?

Related Vendors

EA Elektro-Automatik GmbH & Co. KG

Diotec Semiconductor AG

Rogers Corporation

MESAGO Messe Frankfurt GmbH

Over the past century, the electronics industry has undergone growth that nobody could have ever anticipated. However, it has never faced a challenge like COVID-19. What will this novel pandemic do to the industry?

COVID-19 has turned the world on its head. It is having a significant impact on virtually everything and everyone, and the power electronics industry—and the broader electronics industry on the whole—is no exception.

Thanks to major disruptions to supply chains, both are suffering like never before. This has not been helped by the amount of uncertainty that exists because of COVID-19's dynamic scope and the unpredictable reactions of governments and companies, many of which have paused operations for the time being.

So far as electronics manufacturers are concerned, many are anticipating shipment delays of five or more weeks, with shipping delays from China and other countries where the virus is wreaking the most havoc already having a hugely negative impact on manufacturers. According to IPC research from February, these delays are expected to be longer and will likely have ripple effects for the rest of the year," said John Mitchell, IPC's president and CEO.

COVID-19

COVID-19 to have a significant impact on the semiconductor industry

Just-in-time delivery is starting to feel the pinch

The grim truth is that many of these companies may not survive the pandemic, especially if measures like enforced lockdowns and employee furlough are to continue for a long time. Just-in-time delivery, a model which many electronics companies use, is also starting to feel the pinch. Given that a change in supply and the availability of critical components can cause a profitable company to go bankrupt, this is not a good sign. These companies count on tight margins, something which is fine during times of prosperity, but only a few will have sufficient contingency measures in place that can weather something as grave as a global pandemic like COVID-19.

It is also essential to consider what will happen after the pandemic is over. Surviving the pandemic is one thing; surviving afterward is another. For example, concerns do not solely lay with manufacturers but also their customers—will these customers still be there, or will the pandemic's impact mean that they are no longer there or that they no longer require your product? This is just one of a seemingly endless supply of worrying considerations that electronics leaders the world over need to think about.

Drop in energy demand—despite everyone staying at home

But what about the power electronics industry? Despite everyone staying at home, the power industry is still among the sectors that are affected.

According to energy industry body Independent Commodity Intelligence Services (ICIS), power availability should remain consistent. This is because many countries have put in place safety measures set ensure that operations continue. In contrast, French grid operator RTE expects a national drop in demand. This could be symptomatic of a bigger problem that COVID-19 presents to the nuclear sector. Mycle Schneider, independent energy and nuclear policy analyst, weighed in with his thoughts:

"Covid-19 constitutes an unprecedented threat on sensitive strategic infrastructure, above all the power sector. The largest nuclear operator in the world, French state controlled EDF, announce as early as 10 March 2020 that three of its employees at nuclear facilities had tested positive.

"The French case shed light on a fundamental societal safety and security issue that got little attention in the current Covid-19 crisis. Operation and maintenance of nuclear power plants draw on a small group of highly specialised technicians and engineers.

"The unparalleled dependence on nuclear power in France—70.6 percent of electricity production in 2019—makes its power supply system extremely vulnerable to a general public health crisis like the Covid-19 pandemic."

Renewable energy industry seeing logistical delays

Meanwhile, the renewable energy sector has concerns revolving around global supply chains, much like the general electronics sector. These supply chains are continually slowing down production, with sectors like the wind industry seeing logistical delays.

Giles Dickson, Wind Europe CEO, said, "With Covid-19 we are likely to see delays in the development of new wind farm projects which could cause developers to miss the deployment deadlines in countries' auction systems and face financial penalties."

Supply chain delays are also putting a stop to projects in the solar industry, especially as China is a major producer of solar power hardware and components. With solar power considered by experts to be Europe's long-term power generation source, this highlights the need to have local manufacturing facilities dotted along the value chain in Europe to ensure supply security.

With the pandemic supposedly reaching its peak, it may not be too long before we start to see things returning back to normal. When companies are picking up the pieces, though, they should avoid returning to business as usual and learn from what they are currently going through.

(ID:46557335)