Coronavirus Hits the Heart of Electronics Manufacturing in China
The spread of the coronavirus, also known as Covid-19, has rattled the electronics industry.
From smartphones to LCD televisions, a significant volume of the world’s consumer technology is manufactured in China, or relies on parts made there. China is the world’s largest manufacturer of smartphones, computers and televisions, exporting billions of dollars of electronic goods annually.
The new coronavirus has had an obvious and immediate impact on that productivity, with factories and offices halting operations across the country. According to analysts, the global electronic supply chain is likely to take a serious hit, depending on how quickly the virus spreads, with inevitable delays and shortages.
China has been the world’s biggest smartphone market since 2013, boasting companies such as Huawei, Vivo, Oppo and Xiaomi. Even if the threat of Covid-19 recedes soon, experts believe that it may take weeks for the nation’s electronic manufacturers to restore their operations, including supply chains and logistics. And that is only if the epidemic can be contained in the next couple of weeks; the possibility of the situation being prolonged beyond a couple of months cannot be ruled out, which will affect global supply.
A Huawei spokesman reported last week that the coronavirus has had a limited impact on its supply chain, although the situation is being monitored. Following a temporary closure earlier this month, the company has resumed production of consumer devices and telecommunications equipment, with operations running as normal again. Huawei’s employees in the Hubei province, where over 14,800 people have been diagnosed with the virus, have been working remotely. The company also postponed its annual developer conference in Shenzen, which was scheduled to begin 11 February.
Businesses elsewhere, including Samsung, Google, Sony and others, have relocated their smartphone factories out of China in recent years, moving to countries with lower manufacturing costs, such as Vietnam and India. However, these companies still rely on China for many of the electronic components used in their smartphones.
For example, Apple is still heavily reliant on China, where the bulk of its iPhones are assembled by Foxconn, the world’s largest contract electronics manufacturer. Key Foxconn plants in Zhengzhou and Shenzen, which form the majority of Apple’s iPhone assembly lines, were temporarily shuttered in precautionary steps to prevent the spread of the epidemic. Foxconn, which employs over one million people in China, has not specified a factory restart timeline, but said that its teams are working closely with the respective local government to implement their post-holiday production schedule. While the Chinese government has issued multiple extensions to the Lunar New Year holiday in an attempt to corral the virus, any further delays could impact global shipments.
Firms across China, and especially those in the areas surrounding Wuhan, continue to feel the effects of the epidemic. Businesses are running with bare-bones staffing or remain closed as employees are unable to return to work amid quarantine efforts.
To date, the Coronavirus has killed over 1,350 people and infected over 60,000 people around the world.