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. China is a major manufacturing center with facilities producing parts and components and pumping them through 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, is already apparent. 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. In total, smartphone vendors shipped 36.5 million fewer devices in the first quarter of 2020 than in the first quarter of 2019.
Although the global wearables market is still expected to experience growth of 9.4 percent in 2020, this comes in well under the 89 percent increase the market underwent in 2019. Forecasts show that 10.4 million fewer notebook computers will be shipped throughout 2020, and that gains made in overall PC shipments could be lost in 2020.

Delays in the supply chain

The global semiconductor industry is set to suffer a decline in 2020 due to the coronavirus (COVID-19) outbreak, with disruption to technology supply chain inevitable. According to a March 2020 survey, 70 percent of global electronics manufacturers and suppliers surveyed reported their suppliers are advising a two to four-week delay. However, manufacturers stated that realistically, they are expecting an additional eight-week delay. A recent survey of electronics manufacturing companies and suppliers showed that consumer electronics is the sector likely to face the biggest impact of supply chain delays.

Tech supporting the WFH experiment

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

The Bottom Line

The overall impact of the coronavirus (COVID-19) outbreak remains uncertain. Governments are rolling out stimulus packages just as scientists are developing treatments and vaccines, and neither can come fast enough. While Microsoft say that the impact of the outbreak on that company won't be apparent until Q3 2020, several prominent companies have already outlined expected revenue reductions. The probable scenario for European IT spending would see growth of just 1.4 percent, compared with the December 2019 forecast of 2.8 percent.

There is cause for long-term optimism however, at least in certain sectors of the tech goods and services sector. As factories cautiously re-open across China, analysts are optimistic that parts of the industry will be able to start making up ground by the third quarter of 2020. The Chinese smartphone market could exceed pre-pandemic expectations by Q3 2020, as could global smartphone shipments. Seventy-nine percent of U.S. consumers say they plan to spend about the same, if not more, on consumer electronics in the following six months.

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

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Impact on devices

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