Market research provider TrendForce recently came up with a report showcasing the impact of 2019-nCoV Coronavirus outbreak on tech industry and manufacturing. There has been a considerable disruption in the technology sector due to the epidemic outbreak, with many leading technology fairs and conferences cancelled and companies missing their production/profit predictions.
Various leading tech companies have withdrawn their attendance from the upcoming Mobile World Congress (MWC) meeting scheduled to be held in Barcelona on February 24th. Companies like Sony, Amazon, LG Electronics and Ericsson have pulled off their arrival in the event citing risks for any outbreak of more disease. GSMA, the organizing body of the event has been monitoring, and increasing virus control measures as more and more attendee companies withdraw their participation.
Coronavirus Impact on Tech Ind.
On February 9th, the GSMA stated that it would prohibit travellers from the Hubai province to attend the event, and any fellow who visited China before the event would have to demonstrate their stay outside China for 14 days before attending the MWC.
The following analyses are broken down in individual components to give a detailed report of the tech industry.
- The production of the smartphone is projected to witness a decline of around 12% this quarter. This is the lowest quarter in a span of the last five years. As the supply of smartphones is labour-intensive, the sector is highly hit by postponing of productions, and there is also a massive shortage of smartphone components in the market.
- As many fibre optics suppliers have their base in Wuhan (the origin of the epidemic and which accounts for around 25% of the total global production of fibre optics), the market is severely affected. China’s 5G rollout has also been changed because of the rising demand for optical fibre cables in the stations.
- However, the DRAM and NAND flash markets would be unaffected as they undergo a prior material stockpiling and because of the automation of the semiconductor fabs in companies like Samsung and SK Hynix.
- The video game console industry has been mishit, with manufacturing stalled for a long time. However, the next generation product of the same shouldn’t be affected as the outbreak is scheduled to be mitigated by the end of the quarter. With PS5 and Xbox Series X expected to be launched during the holiday season, the manufacturing will resume by then hopefully.
- There is a decline in the current demand of PS4 and Xbox One due to the anticipation of the next-in-line to be launched machines. This means there wouldn’t be such a shortage of the current gaming machines.
- Smartwatches, laptop, PCs as well as smart speakers have been heavily hit with a decline in demand/supply in comparison to the previous years. The smartwatches are scheduled to decline to 16% per cent from prior expectations, even though demand for wearables is expected to rise during the end of the quarter when Apple Watch is updated.
Store Closures
At the beginning of February, many tech companies like Apple, Samsung, Microsoft, Tesla and Google stated that they would temporarily shut down their offices and stores across China. Google has already closed offices in nearby cities of Hong Kong and Taiwan.
Though e-commerce giant Amazon has not announced office closures yet, it has asked employees to get prior approvals and confirmations for any travel to China. Also, Amazon employees travelling in and out of China are advised to work from home for 14 days before resuming office. While social media giant Facebook doesn’t have an office in China, it has warned all their employees to not indulge in any non-essential travels to China.
