With fourth-quarter earnings in full swing at the same time the coronavirus outbreak is taking hold of the capital markets, it’s allowed investors to see which sectors are pushing through the volatility. One of those has been the semiconductor industry, which in China, forges on despite the rising number of coronavirus cases.
“While most industries have shut down, necessities in the medical, food, and logistics industries have carried on working,” a Technode.com report noted. “Semiconductors are one of the industries that have carried on production—even in Wuhan itself. There couldn’t be more of a striking example as to how important the semiconductor industry is to the Chinese government. It can’t stop for a week, even for covid-19.”
One of the reasons for their resiliency is because semiconductors must simply move forward—the classic sunken cost fallacy a la economics.
“It may sound crazy to carry on working in Wuhan right now, but shutting down a fab (semiconductor fabrication plant), even temporarily, is very expensive,” the report added. “Fabs usually run 365 days a year. They may sometimes undertake ‘warm’ shutdowns for a few days for maintenance work, but almost never come to a complete stop. In a warm shutdown, the machines are kept on doing dummy runs to keep the equipment stable so production can continue straight away, meaning staff must be on site.”