Late last year, a previously unidentified viral outbreak in Wuhan, China caused international concern; the coronavirus has since taken over 1,000 lives and infected nearly 60,00 people. The full impacts of this epidemic are still yet unknown, but already the effects are showing up in the tech industry. Here’s what we know so far:
Current State of the Outbreak
Wuhan was put on lockdown shortly after the news of the virus hit international airwaves, and the Chinese government extended their holiday season as an encouragement for families to stay home, rather than risk spreading disease further by traveling.
In order to facilitate international response to preventing the spread of the virus, the WHO designated the outbreak a Global Health Emergency. While epidemics are hard to compare to one another, data collected about the virus so far indicates a lesser mortality rate than SARS or EBOLA. However, the virus is potentially more contagious, which is why the total deaths already exceed the SARS outbreak.
While there have been a limited number of cases identified outside of China, nearly all have been linked to people who have traveled to china, or their family members. Otherwise, the virus seems to be mostly contained in China for the time being.
But hovering over these reports is a sense of doubt. There is general fear in the market that the Chinese Government is covering up the true impact of the virus, and that there are still opportunities for the disease to spread to other countries with fewer resources. Some fear that the virus has yet to reach its peak.
Coronavirus Impacts to Production
Wuhan is one of the largest hubs for technology production, and a lot of tech is shipped to the US from there. Due to the quarantine in place, factories in Wuhan and some other parts of China are either running on skeleton crews or are shut down completely, limiting supply of components and halting manufacture of finished goods. China has one of the largest economies in the world, and in some sectors it has ground to a halt.
Naturally, this has delayed product launches, and caused shortages in available products. Major brands have shut down corporate offices, retail locations, and factories in China to prevent further spread of the virus. Travel to and from China has ground to a halt as flights are delayed, or cancelled, and companies are banning travel until the virus is contained.
Certain segments of the market are set to be impacted more than others; smartphones, for example, are slated to decline due to factory closures. Video game consoles, however, are not expected to be impacted as harshly.
In addition to manufacturing concerns, companies have been backing out of tech conferences over concern for the health of their representatives. MWC in Barcelona was cancelled as many attendees withdrew, citing risks for further outbreaks. Esports tournaments for LoL, PUBG, and Overwatch were also canceled, creating delays for both the sports industry and their sponsors.
All over the globe, businesses are already being impacted.
Chiefly, it remains to be seen if the coronavirus is truly contained. Expecting delays and shortages of next gen tech will ripple at least until the end of Q1 for most manufacturers. Apple’s recent announcement recalculating their Q1 goals highlights this transition.
Depending on the spread of the virus, impacts across multiple industries could impact the global economy. For now, business leaders should hope for the best, and plan for the worst.