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How The Coronavirus Has Hit The Tech Supply Chain

The tech industry is being hit particularly hard by the coronavirus. Here's how.

Wuhan, in the Hubei Province of China, has become the epicentre of one of the deadliest epidemics since the SARS outbreak in 2003, with 40,000 cases confirmed in China as of 10th February.

While quarantines and travel restrictions have contained the greatest impact in China, the virus has reached North America and Europe, with eight confirmed cases in the UK (at time of writing).

It's a global health outbreak that's sending ripples through the tech industry in particular.

Home to electronic factories and component manufacturers, China is a key link in the global supply chain for smart phones and other consumer tech. With Wuhan under lockdown and several other Chinese cities following suit – like Taizhou and parts of Hangzhou, which is home to Chinese retailer Alibaba – production has come to a near standstill.

Foxconn And Apple Disruptions
Taiwan-based Foxconn, the largest manufacturer of Apple iPhone, shut down its Chinese operations until 10 February, and has now only partially reopened, with 10% of its workforce returning to its Shenzen factory, a key production site. iPhone and Airpod production is expected to be delayed due to the production slowdown. Anticipated mid-range Apple phones, like the iPhone SE 2/9, the next iPad Pro and MacBook are all expected to be delayed too. 

Foxconn is offsetting production through its other sites in India, Vietnam and Mexico however, according to Reuters.

Like many other operations in China, Foxconn shut down over the Lunar New Year break, which was extended to the 10 February date due to the outbreak. Our friends at GearBest were also impacted with shipping dates pushed to resume after the 10th.

Certain Chinese regions are advising companies to remain closed for even longer, until 1 March, as reported in CNBC.

Analysts expect that in the current quarter, Apple will ship between 5-10% less iPhones than anticipated. Apple has already closed all its retail stores in China.

Qualcomm the largest smartphone chip and modem manufacturer announced its expectations for lower earnings for the next quarter due to the uncertainty around coronavirus in China. China is both a key manufacturing site for Qualcomm and a major source of its revenue. The country is also a significant market for smartphone purchases.

Facebook has stopped taking orders for the Oculus Quest, stating, "...like other companies we’re expecting some additional impact to our hardware production due to the Coronavirus. We’re taking precautions to ensure the safety of our employees, manufacturing partners and customers, and are monitoring the situation closely. We are working to restore availability as soon as possible.”

Similarly, Asus tweeted its ROG Phone II won't be available until further notice due to the disruptions caused by the coronavirus.
Impact On Trade Shows: Mobile World Conference 2020
Beyond supply chain break downs, major tech brands and journalists are pulling out of the Mobile World Congress (MWC) trade show scheduled later this month. The MWC is the largest electronics and smartphone industry event, and often the site for brands to announce new products.

Vivo, Intel, and Amazon are the latest to drop out, following Nvidia, LG and Ericsson. Samsung, expected to launch its Galaxy S20 range on 11 February, will be reducing its presence at the event. Sony announced earlier it would drop out, but has since confirmed it will continue with an online-only conference instead, so we might still see the Sony Xperia 2 announced.

LG's MWC exit also throws the LG G9 and LG V60's launch date into a spin, which were expected to be announced on Sunday 23 February. 

Xiaomi, which is set to launch its Mi 10 phone on 13 February, will still participate in MWC under precautions, as it announced on Twitter.
Electronics manufacturer MediaTek will not participate at MWC either.

The UK declared the coronavirus as a "serious and imminent threat" to public health, after the World Health Organization declared the virus a global health emergency at the end of last month. The death toll has surpassed SARS'.

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