The COVID-19 outbreak is rapidly affecting business globally across sectors and causing global financial markets to tumble sharply. The tech industry is not immune to the effects either. A variety of both short-term and long-term effects are being predicted – with cancelled events, factory and store closings, production shortfalls and delayed product launches.
Disruption in supply chains
Companies with direct exposure to China, with their hardware and product manufacturing units located there, were among the first to feel the effects. Apple was the first to announce that customers worldwide should expect a shortage of iPhones and iPads as coronavirus has affected their supply chain. Both Foxconn and Petragon factories in China, which produce most of the iPhones were shut in February, resulting in a global shortage. Apple had also shut all retail stores across China with an impact on the company’s bottom line. The company also released an update to investors saying that it did not expect to reach its revenue guidance for the second quarter.
Microsoft followed soon announcing that it had cut sales projections in its personal computing business, in the current quarter due to the outbreak. It relies on Chinese manufacturing units for supply of its Surface laptops and tablets. Personal computing accounts for approximately a third of Microsoft’s revenue and includes Windows installations on other computers.
More companies announced product delays. Facebook said that it had temporarily stopped taking orders for its Oculus Quest VR handset, while game-focused phone set makers Asus also informed customers to expect delays. Tesla’s delivery dates for its Model 3 cars were also pushed ahead due to the outbreak. Oppo, Xiaomi, Lenovo, and Huawei are also expected to feel the disruption as they rely on components made in Hubei, the epicentre of the pandemic and Guangdong, where the outbreak is less severe.
In February, the big tech players like Apple, Google, Samsung, Microsoft and Tesla temporarily closed its corporate offices across China and Hong Kong and advised against travel. However, it’s not all gloom and doom for a company like Zoom. The teleconferencing software company saw a sharp rise in its share price as globally, office workers stayed home and connected with their teams via teleconferencing.
Highly anticipated tech industry event and conferences have been cancelled considering the travel restriction protocols following the COVID-19 outbreak. The world’s largest mobile phone makers conference Mobile World Congress in Barcelona was cancelled following a pull-out by multiple companies including Nvidia, Amazon, Intel, Cisco, Ericsson, and LG Electronics. The largest Game developer conferences like the GDC in San Francisco originally scheduled mid-March have been postponed while Facebook cancelled its biggest annual event in May, the F8
which draws developers, creators and entrepreneurs from around the globe. It also cancelled its Global Marketing Summit in March with an expected draw of 4000 tech industry professionals.
As the world continues to reel from the COVID-19 outbreak, analysts are forecasting that there could be more trouble ahead for globally connected businesses. As manufacturing takes a hit, prolonged supply chain disruptions are expected to last months and businesses are now assessing next steps and revising guidance for the next few quarters