The new coronavirus is holding back the development of the global electronics industry
The outbreak of the new coronavirus in China has already affected the electronics industry. According to a new analysis released by IDC, smartphone sales in China will drop by more than 30% in the first quarter of this year. And the Canalys survey estimated that “technology vendors appear to have paused their marketing activities and they are unlikely to focus on launching new products, including 5G phones.” Vendors need time to adjust their product plans for selling in the Chinese market, which May reduce the total number of 5G mobile phones listed in 2020.
S&P Global also estimated the impact of the coronavirus outbreak on the global economy. “The speed and spread of the virus over the past two months has posed a threat to both the global economy and credit,” the rating agency said. The agency sees a slowdown in China’s economy, with its GDP growth forecast down from 5.7 percent. to 5%. This will have a 0.3% impact on global GDP in 2020.
To contain the outbreak, the Chinese government extended the Spring Festival holiday and delayed the opening of offices and factories. However, these measures, along with quarantines, have had an impact on global supply chains, as many companies around the world manufacture their products in China or buy components made in Asian countries.
In manufacturing, many companies have conducted targeted health screenings of workplaces at risk of virus transmission and then selectively reopened. Companies must comply with a series of rules set by the government, not least by setting up appropriate quarantine zones to isolate anyone who needs to be quarantined.
Not only that, but the Mobile World Congress (MWC) has also been cancelled. The GSMA issued the following statement: “Considering the safe and healthy environment in Barcelona and the host country, the GSMA has decided to cancel the Mobile World Congress 2020 scheduled to be held in Barcelona. The global concern caused by the novel coronavirus outbreak, travel risks and other reasons have prevented the GSMA from refraining from This conference will not be cancelled.”
The South Korean Semicon and China Semicon conferences were also canceled at the same time. The International Solid State Circuits Annual Conference (ISSCC) was largely unaffected and was still held in the United States from February 16 to 20 as scheduled, but a few paper speakers were unable to attend due to travel restrictions.
Responses from companies
I contacted some companies to ask their opinion on this outbreak and how they are dealing with it. Fabio Violante, CEO of Arduino, said: “We have not seen any material impact of the new coronavirus on our supply chain. Like most companies in the electronics industry, we are in many cases dependent on components provided by Chinese factories, so the future Shortages may occur. Some distributors in the supply chain network have reminded us that there may be a slight delay in the supply of components, but we believe that there will be no material impact on our deliveries. We will continue to monitor the situation and take appropriate measures to mitigate the impact.”
Infineon, which has a sales office in Wuhan, has reduced its business activities to a near standstill.
An Infineon spokesperson said, “Currently, there have not been any cases of infection among Infineon employees. In the event of similar symptoms, we advise employees to stay at home and keep in touch with our medical services for further information. help.”
He continued: “Infineon has been closely monitoring the development of the COVID-19 outbreak, especially in the Hubei region of China. The safety of our employees and business partners is our top priority. Infineon has formulated guidelines for entry and exit from the affected areas. detailed guidance.”
The spokesperson concluded, “Infineon has no production facilities or production partners in Hubei Province. If government restrictions and air freight restrictions have an impact on our supply chain and may lead to delays in delivery, we will contact the affected Customers are in close contact to mitigate the impact.”
EPC is a leading supplier of gallium nitride (GaN) power management technology, but its technology and products are not limited to improving power conversion efficiency.
Alex Lidow, the company’s CEO, said, “The Chinese market has slowed down significantly. The Lunar New Year holiday has been extended by a whole week and the supply chain has been disrupted. We all want to end all danger and isolation as soon as possible, but no one can make predictions.”
Lidow continued, “We do have some customers canceling orders, and some supply shortages, but they’re not serious enough. We’re still waiting to see, will it get worse? Is the supply chain sustainable? As of now , we feel that the supply chain is adapting to this situation. We do not have a manufacturing facility in China, and our Chinese distributors are well stocked.”
In an editor’s note, Maxim stated: “Maxim will participate as planned at Embedded World in Nuremberg, Germany, from February 25-27, 2020. However, we will also continue to monitor closely. The development of the novel coronavirus, because the protection of employees comes first. If there is any indication that there is a serious risk, we will take appropriate measures.”
Microchip announced that it will not participate in the 2020 Embedded World exhibition. “Given the current health environment and the uncertainty posed by the novel coronavirus outbreak, we need to exercise as much caution as possible to manage its potential risks,” its press release declared.
Advantech also issued a press release in response to the current coronavirus outbreak. Advantech has nearly 8,000 employees worldwide and has not detected any infection cases so far. Its employees in mainland China are close to 3,400 people (including direct and indirect employment), most of which are located in the manufacturing center in Kunshan, Suzhou, and the rest are located in various cities, including Beijing, Shanghai, Shenzhen, Guangzhou, Xi’an and Chengdu.
According to its press release, “No Advantech employees are currently infected, and many employees in China will continue to work from home. The safety and health of our employees is our top priority. The Kunshan Manufacturing Center (AKMC) is expected to resume some production in late February ( 30%). Advantech’s manufacturing centers in Kunshan and Taiwan undertake all product manufacturing, and each manufacturing center accounts for about half of Advantech’s production capacity. Among them, the manufacturing center in Japan mainly focuses on Customized Demand Services (CTOS). Manufacturing centers in Taiwan and Japan are operating normally.”
Power Integrations, Inc. is a Silicon Valley-based supplier of high-performance Electronic components for high-voltage power conversion systems. Doug Bailey, its vice president of marketing, said: “We expect a brief disruption to end-user demand in China and the material supply chain located in China. But we expect epidemic control efforts to be successful in due course, except for those unfortunate who are directly affected by the disease. people, there will be no permanent negative effects.”
Doug continued: “We prefer to plan ahead for possible risks, which is why we have fabs and packaging production in multiple geographic locations. Product deliveries are not expected to be affected. We have subcontracted assembly in China. Manufacturers, all are still in operation. Our inventory is outside China, and we also have assembly plants outside China that can make the same products. No impact on product offerings to customers is expected.”
Component distributors like Arrow and Mouser are also closely monitoring the outbreak. Arrow Electronics and its team have been in constant contact with local leaders to ensure appropriate action is taken in a timely manner. Currently, the Chinese government has restricted the movement of people in and out of Wuhan.
An Arrow spokesman said, “Arrow’s business continuity plan has a rigorously structured approach, and we assess the global impact of major events by establishing, maintaining and continually developing a continuity plan, while implementing necessary ongoing contingency plans. impact on employee health and safety, assets, critical process workflows in scope.”
The spokesperson concluded, “As the coronavirus outbreak continues, we are monitoring its development globally. Our Asia Pacific operations team has taken action to ensure the right people work with our transport partners to develop contingency plans to Ensuring the integrity of the supply chain. Given that our top priority has always been the safety of our employees, we reopened operations in Beijing, Shanghai and Shandong on February 10, and Hangzhou, Xiamen and Northeast China on February 17 in accordance with Chinese government instructions Currently, there are limited delays and extended lead times for products made in China. We will continue to work closely with our suppliers to continuously monitor any possible impact on the supply chain.”
Mark Burr-Lonnon, Mouser Electronics vice president of global services and senior sales, said, “As of now, all manufacturers we work with have confirmed that their production will not be affected in any way, but as the situation changes, supply may change, and we I believe that gradually there will be more accurate predictions and judgments.”
He continued: “It’s safe to say that this period is going to be a very challenging one, and the longer the virus spreads and the wider it spreads, the bigger the impact will be, preventing the movement of people as well as transport. To prevent any consignment entering the company from becoming infected, our shipments will also be quarantined for 7 days from the date of shipment, as recommended by WHO.
On February 11, the Assodel (Associazione Distretti Elettronica) meeting of the Italian electronics distributors’ association was held as usual, at which trends in the Italian semiconductor and subsystems market were analyzed. Assodel is a member of the International Electronics Distributors Association (IDEA). Given the warnings given by the novel coronavirus and the uncertainty surrounding production, the association’s president, Mauriti Maitti, urged the nearly 50 managers present to provide an update.
The overall feeling is positive. Some semiconductor, PCB and connector makers with production in China have minimized their production in China, saying that while not yet operating at full capacity, production lines have restarted and delivery times are expected to be extended by up to a few weeks. Some large distributors also confirmed that, based on reports so far, the situation of their suppliers is nothing to worry about.
During the meeting, they also took into account another variable, which is well-known information such as the closure of some European ports or restrictions on merchant ships from China, and the ban on flights to and from Italy, which is not only related to parts production but also logistics. Relatedly, logistics freight has been greatly affected.
After the meeting, I interviewed Diego Giordani, director of Tecno. He said: “As you understand, it looks like the situation is under control, but we have to monitor the situation carefully. On the advice of Chairman Maitti, we have established a mechanism of weekly inspections to monitor the situation of Assodel members. On the 20th, there was a meeting with the top management of IDEA, chaired by Georg Steinberger, at which the whole international situation was analysed.”
Giordani continued: “I’ve heard that some Italian companies are also assessing the market ‘impact’ and I dare say that these companies are monitoring product by product on a daily basis to identify any potential risks. Some of these companies have confirmed that even if the crisis is over, Some products will also remain in production in Italy or Europe. They have not yet assessed the impact this situation will have on final prices. For those with manufacturing plants in China, the Chinese government requires them to establish quarantine areas for their employees and guarantee all necessary medical and health measures. And those employees who are working from home continue to stay home.”
As the crisis is not over yet, it is too early to analyze the mid- to long-term consequences, and we will continue to wait and see how the next few weeks unfold to understand the actual scope of the outbreak and its economic and geographic consequences.
Reference: Covid-19 Is Crimping the El