As the world continues to make frantic efforts to contain the deadly Coronavirus, technology devices, and accessories manufactured in Chinese factories are facing various production disruptions.
A new report by TrendForce highlights some of the technologies and innovations that could become scarce should the virus defy all containment plans. Should the supply of these innovations become scarce consumers around the world including in Africa would be affected.
Wuhan, seen as ground zero in the coronavirus outbreak, is where some of the most important technology products and innovations are manufactured. Touted as China’s ‘Optics Valley’, Wuhan is among other things, home to China’s indigenous memory chip companies, including NOR flash maker Wuhan Xinxin Semiconductor Manufacturing (XMC) and Yangtze Memory Technologies Company (YMTC), a 3D NAND flash memory specialist.
In the wake of the coronavirus outbreak which has weakened over 73,100 people in Asia, with at least 1,869 people dead according to statements from health officials in China. Africa has so far reported one case of the virus in Egypt.
While the four technologies highlighted below are not the only innovations listed in the report, they are selected for their direct impact in markets like Nigeria:
Smartphones
Smartphone production in the first quarter of 2020 is predicted to drop by 12 percent year-on-year, making it the quarter with the lowest output within the past five years. TrendForce notes that this is because the smartphone supply chain is highly labor-intensive. The report highlights that smartphone parts in the upstream supply chain, including passive components and camera modules, are also showing shortages, which can potentially continue to negatively affect smartphone production in the second quarter of 2020 if the outbreak is not contained by the end of February.
Already, Apple has warned that there was a “slower return to normal conditions than we had anticipated” pointing to issues around its supply and demand.
TrendForce also agrees that product demand might be affected with consumers having to contend with higher prices in the long-term should the outbreak intensify.
“Because of the interconnectedness of the global economy, the progression of China’s outbreak damages not only China’s GDP but also the overall global economy, leading to a reduction of consumer purchasing power and subsequently presenting a difficult challenge for the overall smartphone industry,” the report noted.
It further predicted that 2020 smartphone production will reach 1.381 billion units, a 1.3 percent decline YoY and the lowest output since 2016. Still, due to the outbreak’s mercurial nature, it is entirely possible for 2020 smartphone production to fall below this forecast.
5G technology
For countries like Nigeria expecting to launch commercial 5G technology in 2020, the report sees a roadblock ahead. This is because Wuhan is home to the world’s largest manufacturers of 5G infrastructure such as PCB and optical fibers. Given that Wuhan is ground zero of the outbreak, the 5G supply chain is expected to be negatively affected.
“The delay in 5G infrastructure build-out, limited smartphone replacement demand, and postponed work resumption at fabs will collectively decrease the shipment of Chinese 5G smartphones,” said TrendForce.
Notebooks, LCD monitors, and LCD TVs
The outbreak of the virus and the consequent restrictions may have hit manufacturers of Notebooks, LCD monitors and LCD TVs the most, according to the report. This is because even after the virus is contained and things begin to go back to normal, the operator’s work resumption rate is low, all types of materials and components are in shortage thereby affecting productivity.
Hence, TrendForce predicts that TV set shipment will fall from the previous prediction of 48.8 million units to 46.6 million units for the first quarter of 2020.
For Notebooks, TrendForce explained that to assemble a NoteBook set requires complicated key components. At the current stage its batteries, hinge, and PCB already experienced shortage or out of stock. This factor might cause some brands’ shipment quantity to remarkably drop from the previous prediction (35 million units) to 30.7 million units in 1Q20.
“The pandemic not only negatively affected the product’s supply chain, but it also hurts China’s consumer confidence and reduces end-market demand in the short and long run, respectively,” TrendFore said.
LED
Light Emitting Diode (LED) is used to illuminate objects and even places. Due to its compact size, low consumption of energy extended lifetime and flexibility, it is widely used in many applications like TV Backlighting, lamps, etc. The LED packaging chain is mainly distributed in Guangdong Province and Jiangxi Province, which is not the epicenter of the Coronavirus outbreak. However, the large demand for manpower means that most of the employees come from the expatriate population all over China.
The report notes that if the medium- and long-term problem of labor shortages is not resolved, the impact will be more severe. As for the demand side, various operators have begun to stock up orders in advance and increase the inventory level, thus pushing up a wave of stock demand. Each production link will decide whether to raise the price in response according to each supply status.
BusinessDay reported how the travel ban in China as a result of the Coronavirus is beginning to affect tech businesses in Nigeria. Unless the virus is contained as soon as possible and normalcy restored in tech supply chain, more businesses and consumers are expected to feel the impact.
