Supply chain analytics provider TrendForce has released a report assessing the likely impact of the 2019 nCoV outbreak on engineering manufacturing. The corona virus has already caused major disruptions across the technology industry. Large trade shows have been canceled and companies like Apple expect to miss their forecasts.
The report divides its ratings into individual components and product categories to provide a comprehensive overview of the industry. There could also be an indication of what individual companies like Apple might expect. It is worth reading the whole thing, but here are some takeaways:
- Smartphone production is expected to decline 12 percent this quarter over the previous year. It would be the lowest quarter in five years. The supply chain is labor intensive and is therefore severely affected by the postponement of resumption of work. In addition, upstream components such as camera modules are becoming scarce.
- Several fiber providers are based in Wuhan, where the outbreak of the corona virus originated, and together make up 25% of global production. China's 5G launch could be impacted due to the increased need for fiber optic cables in next-generation base stations.
- DRAM and NAND flash markets are unlikely to be affected due to material inventory and high levels of automation in semiconductor factories operated by companies such as Samsung and SK Hynix.
- Video game console manufacturing has been severely impacted, but next generation production should not be impacted as long as the breakout can be mitigated by the end of this quarter as the PS5 and Xbox X series will hit the market during Christmas. The current demand for PS4 and Xbox One has already decreased due to the anticipation of the upcoming machines, so that a shortage of machines of the current generation is also unlikely.
- Overall, TrendForce expects smartwatches, laptops, and smart speakers to experience the largest drop compared to previous forecasts. Smartwatches are expected to be 16 percent below previous expectations, although the report notes that wearables sales are usually much higher in the second half of the year when devices like the Apple Watch are updated.
Here are TrendForce's updated forecasts for shipments in different device categories.
You can read the full report here.