COVID-19 (Coronavirus) has caught the world with a blow and as the outbreak spreads across the world. Different companies’ manufacturing operations and supply chains are increasingly getting disruptions on a daily basis. Yet, the worst is yet to come. The world expects that at its peak; Covid-19’s impact will have thousands of companies temporarily shut down or throttle down across the globe. Now among the more vulnerable industries is the tech industry because China; the epicenter of the Corona Virus outbreak homes most tech factories. It also supplies materials and parts used in other tech industries.
What Corona Virus has done according to most reports is that it has caused major disruptions on business sentiment and consumer behavior. We are currently experiencing situations where big companies such as Apple are already expecting to miss their forecasts as well as cancellation of huge trade shows throughout the tech industry.
From the new report, to provide a broad overview of the tech industry, we have broken down the report on our assessments into product categories as well as individual components. The new report is further giving more indication of what’s could be in store for companies such as; Samsung, MasterCard, United Airlines, Apple and Microsoft.
Some of these takeaways on technology and telecoms includes:
Wuhan supply chains
Wuhan – the epicenter of the coronavirus or rather the origin of the virus outbreak. It accounts for about 25% of the global production and supply of fiber optics. The city is so far the most hit hard. Most of its citizens are in quarantine after most people contracting the disease. There were full and partial shutdowns of factories and plants of some of the major tech companies such as the manufacture of fiber optic products and goods. This means that the overall global 5G output, as well as China’s, would really be affected because this next-generation network’s based stations require optical fiber cables.
Apple further, for example, has its primary manufacturer –Foxconn – based in China. As a result of the Coronavirus outbreak, the company was shut down and this has resulted in rapid shortages in the supply of Apple’s products. There will also be reduced forecast in iPhone shipments and the worst is that although companies have contingency plans the spread of coronavirus to different regions makes it hard to pinpoint the regions that might be least affected.
Cancellation of essential tech conferences
It has been a global trend where smartphones and other tech companies hold major conferences in scenarios where they want to launch new flagships in the market. We have been seeing these events with major companies such as Apple and Samsung. For instance, the expected Mobile World Congress (MWC) to have happened in Barcelona, Spain on February 25th was canceled as a result of the virus. The notable MWC is an event popular for bringing together companies to network, forge new business partnerships and share innovations and ideas. We further saw Facebook cancel its Global Marketing Summit and F8 developer conference. Likewise, IBM live-streamed its developer conference while Google shifted its Google Cloud Next event online. As a result, altogether the cancellation of these tech companies has incurred the tech companies over a billion $1.
For-gone in-person business opportunities
Live streaming cannot be compared to conference attendees as far as networking is concerned. Such is because marketers find it casually harder to hare some of the best practices via live streams.
5G technology in remote consultations in Teleconferencing and Tele-health
The outbreak of this epidemic has led to an acceleration in the adoption of the 5G network connectivity. 5G is popular for having near-instantaneous communications, lightning-fast speeds and a higher connection density which is vital for remote communications and interactions. Amid this epidemic, organizations see it that the increased dependence on telehealth and teleconferencing will have 5G help to mount the spread of the virus.
Being technical superior will empower a physician in diagnosing, operating and treating a patient with being in contact with them physically. Such is a good example that makes 5G needed in combating the Coronavirus. We earlier saw China Telecom and telecoms ZTE design a 5G-powered system in January which enables the remote diagnosis and consultation of the virus. The 5G network enabled the connection of experts from the West China Hospital to 27 different hospitals. We expect furthermore regions and hospitals to adopt the 5G as a result of the rapid spread of the virus meaning more experts will be required.
We have seen scenarios where current employers increasing their reliance on teleconferencing tools such as; Google Hangouts, Microsoft Teams, and Zoom. This is because their employees are switching to remote works as a result of health concerns. Coronavirus pandemic, for instance, will rapidly increase the need for 5G network connectivity at the office and at home as it offers teleconferencing tools; uninterrupted and real-time communications.
Decline in smartphone production
There is an expected drastic decline in the smartphone production industry by about 12% quarterly per year. The production, as well as the supply chain, are labor-intensive. Work postponement, as well as a shortage of the upstream components including such materials as camera modules, will have an overall impact of reduced smartphones’ debuts and flagships.
Smartwatches and smart speakers are further expected to reduce by 16 percent. If the virus is however contained by the second half of the year; before Apple launches its updated devices, then the virus will not such a huge impact.
Video games consoles manufacturing
We don’t expect much impact of the Coronavirus pandemic one the next generation console production. Our expectations are that the outbreak will be mitigated by experts by the end of this quarter. And since the Xbox Series X and PS5 expect to launch in the fourth quarter; then their demand should not be impacted. It’s vital to note that the current reduction in the demand for the Xbox One and the PS4 has been a result of the much anticipation of the upcoming generations. This implies that the supply of the current machines has not been affected by the virus.
In a nutshell, we expect that the Coronavirus will have tech impacts where we will have
- Event shake-ups
- Launch delays
- Production shortages
- Store closures among others.