When stores and factories are closed across the country, coronaviruses have a clear and direct effect on productivity. Depending on how quickly the virus continues to spread, analysts say global supply chains could be severely affected, causing delays and shortages.
Since 2013, China has become the world’s largest smartphone market, giving birth to companies like Xiaomi, Oppo, Vivo and Huawei. Gerrit Schneemann, an analyst at IHS Markit, wrote in an email that even if the threat of the Corona virus subsides quickly, it could be weeks before Chinese phone makers pick up their supply chain and logistics. Domestic smartphone sales may fall sharply this month and are unlikely to recover by March. But this only contained the epidemic for a few weeks.
Snowman wrote: However, the possibility of such a situation cannot be excluded for more than one month. In the long term, it will take longer for the supply chain to recover, which will affect not only China and the Asia-Pacific region, but also global supply.
A Huawei spokesman said that while the company is monitoring the situation, the impact on the supply chain is limited. Early this month, the company resumed production of consumer goods and transportation equipment after a temporary halt. The company’s employees in Hubei Province work from home. Doctors in Hubei Province have made hundreds of diagnoses of the coronavirus. The company also announced its annual developer conference, scheduled for the 11th. February in Shenzhen has been postponed.
In recent years, other companies, such as Samsung, Google and Sony, have gradually moved their smartphone factories from China to countries with lower production costs, such as Vietnam or India. However, these companies still rely on China for the supply of many of the components used in their smartphones, such as sensors or glass screens.
Apple’s supply chain remains closely tied to China. According to Reuters, only about 10 percent of Foxconn factories in Zhengzhou and Shenzhen (where Apple’s iPhone is assembled) were back in operation on Monday. These factories are the largest part of the global production chain of iPhones, and further delays could affect global shipments.
Apple closed all of its retail, corporate and contract offices in mainland China on Feb. 1 for a very thorough investigation. Apple’s retail opening in China is scheduled for the 9th. February will reopen nationally, but it looks like the reopening will be indefinite. Apple is expected to release the iPhone SE2 at a lower price in March. But the sellers said this could also be delayed.
China also produces about half of the LCD screens used in televisions, laptops and computer monitors. Five LCD factories are located in Wuhan, the capital and commercial center of the coronavirus epidemic. Operations at these factories were suspended after Chinese authorities shut down the entire city last month. David Hsieh, an analyst at IHS Markit, said in an email that capacity at these plants could be halved by February. This could force Chinese manufacturers to raise prices in response to shortages.
According to UploadVR, Facebook reported last week that the Corona virus will affect the production of the Oculus Quest helmet. The company recently stopped taking new orders for standalone VR helmets.
For fear of contracting the virus, several companies have decided not to participate in this year’s Mobile World Congress (MWC) in Barcelona. The MWC is rightly considered the most important event of the year in the mobile phone sector. Companies like Intel, Sony, ZTE, LG and NVIDIA have cancelled their participation. Others have made plans for the meeting, which will be held on the 22nd. February starts, reduced. Chinese electronics multinational TCL has cancelled its upcoming press conference at MWC, but will still be present at the show and announce new devices. Samsung’s participation in global technology events will also be limited, as many of its Korean and US employees will stay home.
Huawei still plans to participate, but will require its employees to live in isolation for a certain period of time in China. Meeting organizers announced on the 9th. In February, they announced they would ban all travelers to China’s Hubei province and require all other visitors to prove they had been outside China for at least 14 days, which is the latency period for the disease. WAC participants can expect regular temperature checks and a handshake-free policy.
Financial impact of various technology companies
- Apple Inc. (AAPL), -2.44% shares performed below financial expectations for the second quarter as production in China slowed or stopped due to the KOVID-19 epidemic. The company said in a statement Monday: Work is resuming across the country, but we are slower than usual. Apple Corp. derives about 15% of its revenue from China, and many of its products are made in China.
- Microsoft Corporation (MSFT), -4.21% warned that the company will not meet its forecast for the third quarter due to COVID-19. Microsoft announced in late January that it expected third-quarter revenue for its More personal computing division to be between $10.75 billion and $11.15 billion, with figures outside the normal range to reflect uncertainty about the health situation in China. Despite strong demand for Windows meeting the company’s expectations, the supply chain is normalizing more slowly than expected. Microsoft has stated that all other elements of its guidance for the third quarter remain unchanged.
- Best Buy Inc. is at -9.65%, as it sources a lot of consumer electronics from China. The company stated that it believes the impact of the coronavirus will be felt mainly in the first half of this year. We therefore believe that this is a relatively short-term disruption that will not affect our long-term strategy and plans. Our target is the first quarter, CFO Matt Bilunas said. And the full-year forecasts reflect our current best estimate of the impact.
- Mastercard Inc -4.18% due to growth in cross-border travel and, to a lesser extent, cross-border e-commerce COVID-19.
The online entertainment industry is a technology sector that has not tried to contain the epidemic. When millions of Chinese leave work and go home for a few days, many turn to video games, movies and social media for entertainment. Balloon Weekly reported that game time and purchases in China have risen sharply since January. But if the virus continues to spread and threaten one of the world’s largest economies, the benefits may be short-lived.
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