In late December last year, an outbreak of coronavirus disease was reported in Wuhan, China to the World Health Organisation(WHO). WHO recently renamed it to COVID-19(“co” and “vi” for coronavirus, “d” for disease and “19” for the year it got discovered) and the virus named SARS-CoV-2. The unknown illness had different names including Wuhan pneumonia and Wuhan flu and the new name has no association with any geographical location such as Wuhan or China, no reference to animal or group of people and is related to the disease and is easily pronounceable.
The disease began spreading quickly throughout the country and internationally impacting the whole tech industry especially the smartphone market. WHO has already declared it a global public health emergency.
Since the outbreak began, tech companies have been shutting down their offices, factories and retail stores in mainland China, with some in Hong Kong and Taiwan. Google, Microsoft, Apple and Samsung are among the companies.
We’ve seen tech events being cancelled and phone launch events being postponed. Travels to and from China have been minimised unless they are essential for companies like LG and Razer. Most international airlines have suspended their flights to and from China as infections continue to rise.
Mobile World Congress
GSM Association(GSMA) had put in place strict health safeguards and measures for Mobile World Congress, the world’s biggest phone show((that was to take place in Barcelona from February 24th to the 27th)) such as not permitting all travellers from the Hubei Province, all travellers who have been in China to demonstrate proof they have been outside of China 14 days prior to the event (passport stamp, health certificate), implementing temperature screening and attendees had to self-certify they have not been in contact with anyone infected.
Even with these measures, companies choose not to attend including HMD, VIVO, LG, Intel, MediaTek, Nvidia and Sony.
MWC 2020 finally got cancelled. We were expecting announcements from OPPO, Lenovo, Huawei, HMD Global (Nokia), Sony, LG, TCL, Xiaomi, Honor and more but it looks like these companies will have to figure out an alternative approach to launching their products.
It is worth noting that we’ll see delayed product launches as resources are shifted to a new strategy.
Not only are the smartphones companies hurt but also carrier network and chipset companies who attend the show. Most of these carrier companies come to this event for business partner gatherings as it was a great place to get everything done at once. It now looks like these meetings will have to be held elsewhere and that’s another hurdle.
MWC 2021 is still happening in case you’re wondering. John Hoffman, CEO of the GSMA said that the GSMA and the Host City Parties will continue to be working in unison and supporting each other for MWC Barcelona 2021 and future editions.
Also, MWC Shangai is also going to be held in June this year.
Early stages of COVID-19 are already having conferences cancelled and putting pressure on supply chains
The uncertainty hanging over smartphone brands
Early stages of COVID-19 are already having conferences cancelled and putting pressure on supply chains for a lot of smartphone manufacturers who not only heavily rely on China for production but also have a huge market in the country that gives them a significant portion of revenue from sales.
Apple is already feeling the effects of COVID-19. Apart from closing retail stores, shutting down production to issuing a rare earnings warning that said they wouldn’t be able to meet quarterly revenue expectations as impact of the virus will limit iPhone production and lower demand Apple products within China.
Apple now has a $63 billion to $67 billion revenue outlook for this current fiscal quarter and the wider range is thanks to the uncertainty hanging over the impact of the virus. It now looks like Apple’s revenue for the three-month period between January and March will fall short of $63 billion.
It has been predicted that the iPhone 12 series of devices to be unveiled later this year will have a short supply at launch thanks to a late production start as it is too tricky to start building the iPhone 12 phones from scratch in other countries. However, Apple can shift orders to production facilities in Taiwan.
The iPhone 9 or iPhone SE2 will also be impacted by the outbreak and the release date probably rescheduled.
Samsung pushed some of its production to nearby Vietnam although it is limited. Samsung expects sales of its phone in retails stores to suffer. They even had to launch a delivery service in South Korea to send out its latest devices launched at Galaxy Unpacked including the Samsung Galaxy S20, Galaxy S20+, Galaxy S20 Ultra 5G, their foldable Galaxy Z Flip and the premium Galaxy Buds+ to its consumers in certain parts of the country.
Samsung gives out a 24hour period for testing and later on picks it up if the device isn’t purchased.
Trendforce predicted that Samsung’s Q1 numbers will dip by 3% to a grand total of 71.5 million units.
Chinese device brands
Coronavirus has brought supply chain issues for Chinese smartphone makers including Lenovo, OPPO, vivo, Xiaomi and Huawei and will see manufacturing delays at factories and temporary closure of retail stores.
Factory operations in these companies have been suspended and this hurdle hits significantly for companies that rely on factories and components in the Hubei province which is ground zero for the outbreak and many of its cities are under lockdown.
Most of these companies such as OPPO and Lenovo will rely on its international manufacturing operations in other countries plus rely on global distribution networks to lessen any potential impact on customers.
Huawei has postponed its developer conference that was scheduled for this month until the end of March. On its 5G business, the tech giant has said that there has been no impact on 5G supply after its factories resumed production.
There needs to be time for people to get back to normal life, and demand will not recover fast
“There needs to be time for people to get back to normal life, and demand will not recover fast,” says IHS Markit analyst Anna Ahrens. She adds that a drop in demand in China will be a major factor in a decline in smartphone sales.