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Citi: Epidemic disrupts supply and demand, expects Asian semiconductor demand to recover in Q2

The continuous spread of the Wuhan New Crown Pneumonia epidemic has caused a certain blow to the global economic and industrial prospects. In this regard, the latest report from Citi Research pointed out that the Asian semiconductor industry has shown a strong recovery in the past quarter, but due to the pressure of supply and demand disruption caused by the pneumonia epidemic in China, the expansion of Asian semiconductor demand may be in February and March. The month has slowed down relatively.

According to the Singapore Business Times, prior to the outbreak of the pneumonia epidemic in Wuhan, the total semiconductor exports from South Korea and Taiwan continued to rise. In December last year, the inventory to shipment ratio of Korean semiconductors fell to a new low since June 2009, reflecting The memory chip industry is strong in destocking, and the economy is actively recovering.

However, as the epidemic continues to spread, various regional governments have successively adopted a series of control measures. Citibank's research department issued a report on Monday (10th), saying that this will lead to a significant reduction in China's semiconductor import demand. As the largest buyer of Asian chip exports, China's purchases in 2018 accounted for about 52% of total Asian chip exports.

In addition, domestic companies and factories have resumed work yesterday (10), but the returning population has not completely returned during the Spring Festival. As of Tuesday (11), only 30% of the Chinese labor force is expected to return to work from their hometown. Coupled with the fact that returnees have to isolate themselves for 14 days, the company still faces a labor shortage and it is difficult to resume work in the short term.

At the same time, Citi analysts Kim Jin-Wook and Johanna Chua believe that it may take some time for the logistics of raw materials and finished products to return to normal, so that the manufacturing capacity utilization rate will remain low before the end of February, thus China Semiconductor import demand is not expected to begin to recover until the second quarter of this year.