From cancellations to delays, how COVID-19 is shaking up the tech industry
The novel coronavirus, or COVID-19, has rattled industries across the world. But it's the tech sector, so heavily dependent on a global supply chain and customer demand, that has seen some of the most significant shake-ups.
Seattle, where Amazon's headquarters are located, is among the U.S. cities most impacted by COVID-19.
As you may expect, we've talked a lot about how Apple has been impacted by the COVID-19 virus. But, the impact is wide-ranging, and impacts the tech industry across the board, depending on how they are most exposed. From high-profile event cancellations to production delays of upcoming products, here are the ways that the global COVID-19 outbreak has impacted the technology industry.
Factory closures and delays in production, as well as dampened demand in China, have led to Apple cutting its revenue guidance for the quarter. Many of Apple's suppliers are also predicting similar guidance misses.
Those production issues may also be causing supply of replacement iPhones and service parts to be drying up, although Foxconn, Apple's primary assembler, expects to get back up to speed by the end of March.
Huawei, the largest Chinese smartphone manufacturer, is expecting shipments to drop at least 20% this year due to U.S. sanctions. The Information reported in March that the coronavirus could make that outlook much worse.
It's likely that other Chinese brands are seeing similar impacts, though many are trying to save face. Oppo said in February that its production is running smoothly thanks to overseas operations, and Xiaomi reported a first-quarter hit due to the virus.
As COVID-19 spreads to other manufacturing centers, non-Chinese companies have taken preventative measures as well. Samsung, which produces some of its smartphones in South Korea, is moving portions of its production lines to Vietnam after another Korean staff member tested positive for the virus, Reuters reported.
On March 1, IDC forecast that the global smartphone market could slide as much as 10.6% year-over-year. Domestic shipments within China could see a hit as large as 40%, though supply chain issues will impact other markets.
It isn't just smartphones that are being hit, either. Facebook is expecting production delays of its Oculus virtual reality headset, and Microsoft has warned investors that its segment containing products like Windows and Surface devices would likely miss earlier forecasts.
A recent report via analytics firm TrendForce has also predicted major impacts on smartwatches, laptops and smart speakers. Smartwatch shipments in particular may drop as much as 16% from prior expectations.
The impact on the manufacturing industry is sure to be felt globally, but it's Chinese companies that could stand to lose the most. With both domestic customer bases and local supply chains, there's little doubt that COVID-19 is wreaking havoc on the Chinese tech market, particularly since it's the country with the largest outbreak.
As an example, TrendForce's report indicates that the Chinese 5G rollout could be slowed due to several optical fiber manufacturers being located in Wuhan, where the virus originated.
While foreign companies may see product delays and snarled shipments, it's likely that they'll be able to absorb any short-term impact. Even Apple, historically dependent on China, has a global supply chain. But China's market, and its position as the world's factory, may not be able to shrug off the effects of COVID-19 in the long term.
Many tech firms were forced to close retail stores and offices, while others are encouraging employees to work from home.
In February, virtually every large technology company with locations in China were forced to shut down operations. That included the closing of corporate offices and stores, as well as the aforementioned supply chain shutdown. Apple, for example, closed all 42 of its stores in the country.
The shuttering of corporate office locations has also had an effect on some companies' ability to carry out routine tasks. Xiaomi, for example, failed to get an Android 10 update out on time, likely due to office closures.
As the coronavirus spread to other countries, similar measures were taken. Some Apple retail locations in Italy have been closed, and Google is reported to have closed some of its offices in Taiwan and Hong Kong.
Apple, for its part, has also committed to carrying out "deep cleaning" procedures at vulnerable Apple Store locations.
Many tech firms are also implementing restrictions on travel and in-office work in an effort to control the spread of the virus.
Apple has implemented travel restrictions to China, South Korea and Italy, barring travel to "business-critical" trips signed off by a senior vice president. The Cupertino firm has also sent care packages to staff members stranded in China.
Facebook and Google have made similar moves, though Facebook doesn't maintain any offices in China.
Several companies with offices in Washington, such as Facebook, Salesforce and Microsoft, have asked employees to work from home. Among U.S. states, Washington has been hit the hardest by COVID-19 with 70 confirmed cases and 10 deaths as of March 6.
U.S. companies in other states, as well as corporations in other countries, have also implemented new work-from-home policies. Apple on March 6 began encouraging employees near its Cupertino head quarters to work from home, just a day after Santa Clara County urged tech giants to avoid mass gatherings.
Even as fears of the virus wane over time, it's likely that this major shift could have a lasting impact on how people work. With what is essentially an overnight change, many companies in the U.S. and across the globe are likely to embrace remote work much more wholeheartedly, particularly if productivity and operations go smoothly during the outbreak.
Organizers canceled Mobile World Congress, the largest smartphone trade show in the world, in February. While the Barcelona, Spain event was the first high-profile cancellation, it mostly signaled what was to come.
Facebook and Google have both canceled their annual developer conferences, F8 and I/O respectively. While nothing has been said about Apple's potential upcoming events, it's profoundly likely that the company will follow a similar route for expected keynotes and WWDC '20.
Smaller nixed events include Adobe's Adobe Summit in Las Vegas, which will be offered partially online this year, and Facebook's March marketing conference. Google also made its annual cloud conference to an online-only event.
Not all upcoming events have been canceled. The Game Developers Conference in San Francisco was merely postponed until later in the year, even though high-profile attendees like Amazon, Microsoft, Sony and EA have pulled out.
The annual SXSW festival in Austin, Texas has yet to be canceled, but many tech industry firms have dropped out. As of March 6, the drop-out list includes not just Apple, but TikTok, Amazon, Twitter and Facebook.
While COVID-19 is having a global impact, it's likely that Chinese companies will see the brunt of the effects.
As publishing platforms, some companies have also had to take action against coronavirus and COVID-19 myths and scams.
Amazon, for example, has had to remove thousands of items for price gouging practices during the outbreak. The retail giant also removed millions of item listings with coronavirus misinformation or false claims.
Facebook, too, has banned ads promising COVID-19 cures. It is also offering free ads to the World Health Organization to get accurate information out there.
U.S. stock markets have also seen a chaotic few weeks in February and March as markets tumble due to concerns about COVID-19's impact on the economy, The Wall Street Journal reported.
Some companies have seen that as an opportunity. The dip has allowed Apple to buy back billions of dollars worth of shares much more cheaply than it otherwise would have.
Seattle, where Amazon's headquarters are located, is among the U.S. cities most impacted by COVID-19.
As you may expect, we've talked a lot about how Apple has been impacted by the COVID-19 virus. But, the impact is wide-ranging, and impacts the tech industry across the board, depending on how they are most exposed. From high-profile event cancellations to production delays of upcoming products, here are the ways that the global COVID-19 outbreak has impacted the technology industry.
Declining technology production
Given China's status as the epicenter of technology manufacturing, the COVID-19 outbreak has hit the global smartphone market particularly hard.Factory closures and delays in production, as well as dampened demand in China, have led to Apple cutting its revenue guidance for the quarter. Many of Apple's suppliers are also predicting similar guidance misses.
Those production issues may also be causing supply of replacement iPhones and service parts to be drying up, although Foxconn, Apple's primary assembler, expects to get back up to speed by the end of March.
Huawei, the largest Chinese smartphone manufacturer, is expecting shipments to drop at least 20% this year due to U.S. sanctions. The Information reported in March that the coronavirus could make that outlook much worse.
It's likely that other Chinese brands are seeing similar impacts, though many are trying to save face. Oppo said in February that its production is running smoothly thanks to overseas operations, and Xiaomi reported a first-quarter hit due to the virus.
As COVID-19 spreads to other manufacturing centers, non-Chinese companies have taken preventative measures as well. Samsung, which produces some of its smartphones in South Korea, is moving portions of its production lines to Vietnam after another Korean staff member tested positive for the virus, Reuters reported.
On March 1, IDC forecast that the global smartphone market could slide as much as 10.6% year-over-year. Domestic shipments within China could see a hit as large as 40%, though supply chain issues will impact other markets.
It isn't just smartphones that are being hit, either. Facebook is expecting production delays of its Oculus virtual reality headset, and Microsoft has warned investors that its segment containing products like Windows and Surface devices would likely miss earlier forecasts.
A recent report via analytics firm TrendForce has also predicted major impacts on smartwatches, laptops and smart speakers. Smartwatch shipments in particular may drop as much as 16% from prior expectations.
The impact on the manufacturing industry is sure to be felt globally, but it's Chinese companies that could stand to lose the most. With both domestic customer bases and local supply chains, there's little doubt that COVID-19 is wreaking havoc on the Chinese tech market, particularly since it's the country with the largest outbreak.
As an example, TrendForce's report indicates that the Chinese 5G rollout could be slowed due to several optical fiber manufacturers being located in Wuhan, where the virus originated.
While foreign companies may see product delays and snarled shipments, it's likely that they'll be able to absorb any short-term impact. Even Apple, historically dependent on China, has a global supply chain. But China's market, and its position as the world's factory, may not be able to shrug off the effects of COVID-19 in the long term.
Closed offices, remote workers
Many tech firms were forced to close retail stores and offices, while others are encouraging employees to work from home.
In February, virtually every large technology company with locations in China were forced to shut down operations. That included the closing of corporate offices and stores, as well as the aforementioned supply chain shutdown. Apple, for example, closed all 42 of its stores in the country.
The shuttering of corporate office locations has also had an effect on some companies' ability to carry out routine tasks. Xiaomi, for example, failed to get an Android 10 update out on time, likely due to office closures.
As the coronavirus spread to other countries, similar measures were taken. Some Apple retail locations in Italy have been closed, and Google is reported to have closed some of its offices in Taiwan and Hong Kong.
Apple, for its part, has also committed to carrying out "deep cleaning" procedures at vulnerable Apple Store locations.
Many tech firms are also implementing restrictions on travel and in-office work in an effort to control the spread of the virus.
Apple has implemented travel restrictions to China, South Korea and Italy, barring travel to "business-critical" trips signed off by a senior vice president. The Cupertino firm has also sent care packages to staff members stranded in China.
Facebook and Google have made similar moves, though Facebook doesn't maintain any offices in China.
Several companies with offices in Washington, such as Facebook, Salesforce and Microsoft, have asked employees to work from home. Among U.S. states, Washington has been hit the hardest by COVID-19 with 70 confirmed cases and 10 deaths as of March 6.
U.S. companies in other states, as well as corporations in other countries, have also implemented new work-from-home policies. Apple on March 6 began encouraging employees near its Cupertino head quarters to work from home, just a day after Santa Clara County urged tech giants to avoid mass gatherings.
Even as fears of the virus wane over time, it's likely that this major shift could have a lasting impact on how people work. With what is essentially an overnight change, many companies in the U.S. and across the globe are likely to embrace remote work much more wholeheartedly, particularly if productivity and operations go smoothly during the outbreak.
Cancelled events
The coronavirus has also derailed plans for most many tech events and conferences within the first half of 2020, a trend that could continue later into the year.Organizers canceled Mobile World Congress, the largest smartphone trade show in the world, in February. While the Barcelona, Spain event was the first high-profile cancellation, it mostly signaled what was to come.
Facebook and Google have both canceled their annual developer conferences, F8 and I/O respectively. While nothing has been said about Apple's potential upcoming events, it's profoundly likely that the company will follow a similar route for expected keynotes and WWDC '20.
Smaller nixed events include Adobe's Adobe Summit in Las Vegas, which will be offered partially online this year, and Facebook's March marketing conference. Google also made its annual cloud conference to an online-only event.
Not all upcoming events have been canceled. The Game Developers Conference in San Francisco was merely postponed until later in the year, even though high-profile attendees like Amazon, Microsoft, Sony and EA have pulled out.
The annual SXSW festival in Austin, Texas has yet to be canceled, but many tech industry firms have dropped out. As of March 6, the drop-out list includes not just Apple, but TikTok, Amazon, Twitter and Facebook.
Other effects
While COVID-19 is having a global impact, it's likely that Chinese companies will see the brunt of the effects.
As publishing platforms, some companies have also had to take action against coronavirus and COVID-19 myths and scams.
Amazon, for example, has had to remove thousands of items for price gouging practices during the outbreak. The retail giant also removed millions of item listings with coronavirus misinformation or false claims.
Facebook, too, has banned ads promising COVID-19 cures. It is also offering free ads to the World Health Organization to get accurate information out there.
U.S. stock markets have also seen a chaotic few weeks in February and March as markets tumble due to concerns about COVID-19's impact on the economy, The Wall Street Journal reported.
Some companies have seen that as an opportunity. The dip has allowed Apple to buy back billions of dollars worth of shares much more cheaply than it otherwise would have.
Comments
When I look at the 10-15 pound backpack my 7th grade grandson brings home filled with binders and paper -- and then sit down with him to do his homework using pencil and paper I realize things have not changed since I was 7th grade nearly 60 years ago. (Well, the backpack is new, we didn't use them -- and the homework is harder -- but otherwise its pretty much the same ol, same ol stuff.
But, in a way, maybe that's the problem: in this area teachers and administrators can make 6 digit salaries along with cadillac health and pension plans. I suspect that they just don't want to rock the boat.
Is AI speculating that the west will be so decimated that Chinese exports are affected?
Or, is it that China is now mostly worried about importing the virus from the west and could go though it all again?
There are in fact vaccines that are targeted at what is expected to be the seasonal flu variant for the year, and even for those that get vaccination, and yet still get the flu, the vaccinated tends to have it milder . The fact that people don't even take advantage of available flu shots is puzzling. There is no vaccine available for SARS-nCOV-19.
The response to SARS-nCOV-19, the official name for this variant of Coronavirus, is appropriate for the simple reason that there are so many unknowns about transmission, and it is known that the mortality rate is at least a magnitude higher than seasonal flu.
I will note that you were one of those berating me for providing information weeks ago, stating it was "right wing propaganda" and "fear mongering". I'm happy that you have now come around.
Oh, and this very much did effect China's economy,, and still is, and that is one of the concerns with how the Coronavirus has been handled in the U.S., that it will drive the economy into recession, so don't talk about it.
One intelligent post does not clear you of being a prolific spreader of right wing propaganda.
Well, it was intelligent till you returned to your usual China bashing based on the typical half truths from right wing propaganda sites.
The current Spanish COVID-19 protocol looks like the standard protocol used in other countries.
If a patient presents information such as recent travel history to high risk areas along with a fever etc, they are sent home and told to isolate themselves until a specialist can visit them to take a buccal swab. From that point there is a 12 hour wait for the result. The GP who saw the patient is also sent home for the same treatment. All medical courses, conferences etc have been cancelled and the general recommendation is for doctors not to 'socialise' with other doctors away from their regular duties.
On the business side, I have been told that many non-essential business trips have been cancelled and access to factories is restricted to essential personnel only. There is a level of uncertainty regarding what could happen if a factory employee were to test positive, because it is not clear if the factory would be obliged to close by government. Some of the heavyweight players fear having to shut down factories with hundreds or thousands of workers and see their business lost to smaller competitors. As things stand, primary plastics transformers have increased production to maximum capacity and are looking to stockpile. Secondary transformers are doing exactly the same and all the while, end consumers are also stockpiling. After all this, there will clearly be a dip in sales as a result of the virus dropping out of the news and people using up their stockpiles of bottled water, soft drinks and other plastics related foodstuffs.
Some of the larger companies are already thinking ahead and planning to decentralise some production facilities to better protect them from exceptional circumstances even though this will impact efficiencies.
There was a huge explosion at a petrochemical plant in Tarragona in January which caused severe disruption although it was not catastrophic on an industry level. The explosion was so big, a one ton piece of metal was sent flying into a third floor flat - 2.5 kilometres away.
https://www.fireengineering.com/2020/03/06/485127/violent-explosion-rocks-mediterranean-coastal-city-of-tarragona/#gref
Another factor is climate change resulting in extreme weather conditions and logistics headaches.
Some companies are realising that if it isn't one thing, it will be another but it is impossible to know what will hit and when. Virus, accident, weather, politics etc. As a result, duplicating expensive production hardware (and everything associated with it) is being looked at for the future.
I checked on raw material supply and was told that companies like Repsol and Dow hadn't yet been affected with regards to plastics.
Me, they are just facts.
https://global.chinadaily.com.cn/a/202002/07/WS5e3d1ea5a310128217275d9b.html
"BEIJING - Italy has agreed to temporarily resume some flights with China after it suspended direct air traffic between the two countries last month, the Chinese Foreign Ministry said Friday.
According to a statement on the ministry's website, Vice Foreign Minister Qin Gang had a meeting with Italian Ambassador to China Luca Ferrari Thursday.
Qin said that after the novel coronavirus outbreak, Italy's unilateral decision to stop flights without previously contacting China has resulted in great inconvenience to travelers from both countries and many Chinese citizens are still stranded in Italy.
China urges the Italian side to actively respond to China's urgent and reasonable concerns, and cancel the decision to suspend flights as soon as possible.
For his part, Ferrari said Italy sympathizes with and understands the situation facing Chinese citizens stranded in Italy. For now, it is willing to approve the resumption of some flights upon Chinese airlines' application, and work hard to normalize exchanges between the two countries."
Note the date of the link; February 7, 2020, right in the middle of the outbreak in China.
and then there is this;
https://www.theguardian.com/world/2020/mar/07/italy-democratic-leader-nicola-zingaretti-coronavirus
"Nicola Zingaretti, the leader of Italy’s Democratic party, one of the national ruling parties, has tested positive for coronavirus.
Zingaretti, who is also president of the Lazio region, made the announcement in a Facebook video.
“So, it’s arrived, I also have coronavirus,” he said. “I am fine, and therefore I am in quarantine at home. From here, I’ll continue to do what I can do. My family are also following the protocols, and ASL [the local health authority] is contacting people who have worked closely [with me] in recent days to carry out checks. I have always said ‘don’t panic’ and that we will fight this.”
...
"Italy is grappling to contain Europe’s worst outbreak of the virus, with 4,636 cases detected as of Friday evening, according to official figures. Of that number, 197 people have died and 523 people have recovered. Italy has so far carried out 36,359 tests.
Eleven towns – 10 in Lombardy and one in Veneto – have been under lockdown for almost two weeks. The government is yet to announce whether the quarantine period will be extended. Schools and universities across the country have been closed until 15 March while major sporting events, such as Serie A football games, will be played behind closed doors until 3 April.
The outbreak is severely damaging the Italian economy, with warnings the tourism sector alone could experience €7.4bn (£6.4bn) of losses during this trimester."
Fuck China's "inconvenience". Italy has enough problems with the coronavirus without breaking containment protocol.
That said, this is the kick-in-the-butt canary in the coalmine that tech companies need to GET OUT China, and fast. I think that globalization and concentration of the supply chain has finally met its match in wet markets and culinary traditions. The latter are not going to change any time soon. Companies that don’t do it will be in deep doo-doo when COVID-20 comes around (as it surely will some day).
A couple of years from now, maybe. Not this year, and not next.
Anybody can use Google search to gather facts to support a false statement. That's mostly how propaganda works: It's not blatant lies. It's half truths, one-sided stories and exaggerations gathered to make a falsehood sound true.
Also, from what I've heard, only around 1% of deaths have been outside of someone with some other condition (ie. old age, compromised immune system, etc.).
The worrisome thing is the reported longer time you don't know you have it, etc.... or if you believe some of the conspiracy theories about it being a bio-weapon that got loose.
Based on the hysteria, they really shouldn't have any conferences, conventions, etc. every year and we should all work from home, as we take these risks each year (with the flu and such).
The worst possible case would be a rapid growth in the infected showing symptoms, since those people will need to be treated. Asymptomatic cases will need to be verified by tests as well with likely self quarantine as the solution, so that they do not continue to infect the rest of the uninfected population. Hence, why testing is so important.
Why people don't take this seriously is beyond my comprehension, but no matter, there is already an impact on our economy for retail and service workers, and it is quite evident where there are existing clusters such as Kirkland, Washington. If this isn't contained through testing, and has to go to a mitigation strategy, there will be a high price for our economy, not to mention the fatalities.
https://www.huffpost.com/entry/venice-milan-italy-quarantine-coronavirus_n_5e6421f3c5b6670e72f922ea
About 25% of Italy's population will be quarantined from other parts of the country.