PC and smartphone shipments could decline by 20 per cent and up to 50 per cent respectively, on a quarter-by-quarter basis, due to restrictions imposed by China’s central and provincial governments to help stem the spread of coronavirus.
This is according to industry analyst firm Canalys, which has dramatically updated its initial estimates forecasting the expected disruption to digital device manufacturing in China due to the outbreak of novel coronavirus in the country’s Hubei province in early January and its subsequent spread.
“China’s central and provincial government has imposed firm restrictions on business resumption to limit the chances of the virus spreading caused by cross-provincial migrant workers returning to their workplaces,” Canalys said.
Prior to the virus outbreak, component and device manufacturers were maintaining production at a minimum level during the Chinese New year holiday, according to Canalys, but there are already component factories in parts of the country that have been forced to shut down due to the spread of the virus.
In earlier forecasts, Canalys predicted disruption caused by the virus outbreak would result in a 7 per cent decline in smartphone shipments between Q4 2019 and Q1 2020, and an 8 per cent fall for PCs.
Now, however, the analyst firm has substantially amended those initial forecasts.
“Given currently available information, we are dramatically revised our forecasts to a 40 per cent-to-50 per cent drop for smartphones and 20 per cent for PCs, with the proviso that the situation recovers to pre-outbreak levels by the end of February,” Canalys said.
Given that the incubation period of the virus could be up to 14 days, according to the World Health Organisation, it is highly likely that the outbreak will continue beyond the end of the month.
“The forecast scenario might deteriorate or improve rapidly as more information becomes available,” Canalys cautioned.
However, disruption to the production of devices and shipment numbers is just the beginning, according to Canalys, which has outlined a number of potential knock-on effects from the virus outbreak.
Among these is, perhaps, most importantly, a potential serious impact on the global market for PCs, smartphones and other devices if the outbreak is prolonged, with manufacturers assembling devices that require a large number of human workers expected to adhere to the government’s restrictions.
“More widely spread supply disruptions are to be expected soon, even if just a few key components fall behind in production, or raw materials are not available to fulfil production demand,” Canalys stated.
Additionally, Canalys expects that device vendors’ upcoming product launches will be delayed or even cancelled, given the restriction on large public events in the country at present, while big industry events in China and further afield are likely to be cancelled or delayed.
“Previously planned large overseas launch events will likely be suspended or reduced in size given the travel bans and restrictions imposed by various countries. It will take time for vendors to change their product launch roadmaps in China, which is likely to dampen 5G shipments in 2020,” Canalys said.