The novel coronavirus or COVID-19 outbreak that started in Wuhan, China, earlier this year has been spreading all over the globe at an alarming pace. Several business sectors have felt the impact of this outbreak, none more so than the technology sector. Since China is one of the leading tech suppliers to the United States, the spread of the virus is having a devastating impact on the supply of technology products.
With the implementation of remote work policies and travel restrictions, the COVID-19 outbreak is also forcing tech companies to withdraw from various events worldwide. Here are other ways COVID-19 is affecting the technology industry.
Office closures
Tech giants Microsoft, Google, Samsung, Apple, and Tesla announced that business operations in China will be shut down temporarily in the outbreak's wake. This includes all retail stores, corporate offices, and manufacturing plants.
Apple chief executive Tim Cook said that Apple's supply chain saw a dip in demand resulting from the outbreak. In a report published by the China Academy of Information and Communications Technology (CAICT), Apple shipped around 3.2 million iPhones to China in December 2019, making the region a key growth area for Apple. However, Apple's business analysts had to cut the forecast of iPhone shipments to the region by 10% for the first quarter of 2020 because of the coronavirus outbreak.
Deirdre O' Brien, Apple's head of people, sent an internal email stating that the reopening of offices and retail stores is still being determined. Factors affecting this decision include local restrictions around public areas, health protocols, and the need for additional cleaning.
Google has also shut down all China offices and halted all business-related travel to the mainland. Google advised its employees who are currently in China, as well as any of their immediate family members, to return to the United States as soon as possible. The returning employees were instructed to work at home for at least 14 days from the date of departure.
So far, Amazon has released no official announcement about closing their offices in Beijing, Shanghai, Guangzhou, and Shenzhen. However, employees traveling to the region need to get approval, and those who are returning to the United States should also work at home for at least 14 days.
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Supply shortages and launch delays
Since China is a major manufacturer of technology products, the COVID-19 outbreak has caused a shortage of smartphones, laptops, servers, hubs, switches, routers, and more. One example is the closure of Foxconn. Foxconn manufactures half of the world's iPhones, and the sudden disruption in production saw a sharp decline in the global supply of iPhones and AirPods.
Chinese smartphone manufacturers like Huawei, Lenovo, Oppo, Xiaomi, and Vivo are also experiencing production delays as factories and offices across the nation are halting operations.
In an email released by Lenovo, the company is expecting the impact on production output in the affected areas to only be short term. Lenovo also said that they are focusing on their global networks to minimize production and distribution delays.
In a similar statement, Oppo emphasized that even though the COVID-19 outbreak had scaled back logistics in China, their production facilities in India and Indonesia are helping cope with the demand.
IHS Markit analyst Gerrit Schneemann stated that it could take weeks for these companies to restore normal operations even after the outbreak recedes. He added that if the outbreak continues to spread over the next couple of months, the recovery of the supply chain of the said companies will also take a longer time to recover.
Analyst Sharon Hiu said that the COVID-19 outbreak extended the delivery times of Dell computers to Australia. The shipment times of these computers were originally three to five weeks, but after the coronavirus outbreak, it rose to 10 weeks. Some shops have also reported that their stocks of HP’s Elite series had run out.
Tesla is also feeling the impact of the outbreak, as deliveries of the Model 3 were postponed because of factory closures.
Canceled events
The rapid spread of the coronavirus saw popular tech companies such as Sony, LG Electronics, Nvidia, Ericsson, ZTE, and Amazon partially or fully pull out of the Mobile World Congress (MWC), which was scheduled to be held in Barcelona.
Playstation, Facebook Gaming, and Oculus are limiting travel to China and have all pulled out of the Game Developers Conference to prevent the possibility of infection. Gaming company Blizzard canceled all February and March matches for their Overwatch game, while Playerunknown's Battlegrounds' (PUBG) global qualifying event set for April has also been postponed.
With the shortage of tech products resulting from the COVID-19 outbreak, it's important for you as a small- to medium-sized business (SMB) owner to ensure your company's hardware and network systems are operating at peak performance at all times. A reputable managed IT services provider (MSP) like Summit Advisors, LLC can provide you with cost-effective IT solutions that will keep your business running even at the height of the coronavirus outbreak. If you're in the Wichita area and need a free assessment, give us a call today.
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