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Coronavirus (COVID-19): impact on the global tech goods & services industry

As soon as the severity of the coronavirus (COVID-19) in China was understood, it was clear that the virus was going to have a significant impact on the global tech industry. The initial outbreak in China impacted facilities producing parts and components, disrupting the global supply chain. It is difficult to predict what the final impact will be. However, early analysis predicts overall growth in the tech goods and services sector being limited to two percent to be probable, or a contraction of two percent in a pessimistic scenario.

First signs of the impact on shipments

The immediate impact on the global smartphone market, for example, provided one of the first indicators of the pandemic’s impact. Vendors shipped 37.4 million fewer devices in February 2020 compared with February 2019, marking the single largest year-on-year drop in the market’s history. All major vendors saw a reduction in the number of units shipped over the first quarter of 2020. Huawei staged a strong recovery in the second quarter of 2020, shipping 6.8 million more devices in the second quarter of 2020 than in the first quarter. Smartphone shipments in Africa have also stabilized following a dip at the start of the year, with venders shipping 20.1 million devices in consecutive quarters during 2020.
Shipments of personal computers (PCs) fell sharply at the beginning of the COVID-19 pandemic, undergoing a decline from 70.61 million units in the fourth quarter of 2019, to just 51.64 million units in the first quarter of 2020. Analysts attributed to decline to disruptions along the supply chain. Strong demand, likely linked to an increase in employees working from home, has driven the industry’s recovery. Although the global wearables market is still expected to experience growth of 14.5 percent in 2020, this comes in well under the 89 percent increase the market underwent in 2019.

Tech supporting the WFH experiment

The outbreak of the coronavirus (COVID-19) led to what the BBC dubbed the ‘nationwide work-from-home experiment’. As companies began moving their staff into work-from-home (WFH) arrangements during March 2020, tech companies found themselves on the WFH frontlines. Microsoft Teams saw a surge in daily active users, video conferencing company Zoom experienced has experienced a sustained surge in stock prices, Cisco Webex saw an increase in meeting minutes, and VPN usage rose sharply in affected countries.

The Bottom Line

The overall impact of the coronavirus (COVID-19) outbreak remains uncertain. Governments and employers are responding to second waves, the development of treatments and vaccines continues in earnest, and people are finding ways to adapt to change. Several prominent companies outlined expected revenue reductions early on in 2020. However, until such time as the pandemic is brought under control, the full economic and social impact are still undefined. European IT spending forecasts have improved during 2020. Forecasts made in March 2020 anticipated a drop in spending of 3.86 percent during 2020, and growth of 2.35 percent in 2022. Recent forecasts made in August now outline a contraction of just 1.8 percent in 2020, and growth of 3.4 percent in 2022.

Improved forecasts, along with other signs of recovery such as the increase in shipments of smartphones and items such as personal computers, are cause for long-term optimism, at least in certain sectors of the tech goods and services sector.

For further information about the coronavirus (COVID-19) pandemic, please visit our dedicated Fact and Figures page.

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