Coronavirus To Reduce Smartphone & Other Communication Exports By $5.3 Billion – United Nations
The outbreak of the novel coronavirus in China has severely disrupted the tech supply chain and made a lasting impact on stock markets that has wiped out gains made since the start of this year. Several stocks and market indices are now trading at levels they reached in October 2019, with only a handful (such as Tesla) having maintained gains made during the course of this year.
The impact felt by markets and companies from COVID-19 is twofold in nature. Firstly, since the virus paralyzes life in China and the government takes measures to prevent its spread, consumer spending in the country drops; which results in lesser revenue earned by companies. Secondly, given that China has established itself as the world's manufacturing hub, countless global supply chains depend on the country for raw materials. Therefore, as life slows down in the East Asian country, so does industrial output; which in turn leaves a shortage of raw materials for supply chains globally.
Coronavirus Will Impact Global Communication Equipment Industry By $5.3 Billion Believes United Nations
In a new report today, the United Nations Conference on Trade and Development's Division on International Trade and Commodities estimates the impact from the coronavirus on the different industries and markets around the world. This report uses data from the Chinese government to estimate the drop in output from the country in February and to annualize this drop to reflect the overall impact from the coronavirus to China's exports for the year 2020.
It also uses the Grubel-Lloyd Index to estimate how vulnerable a country's exports in a manufacturing sector are to any disruptions that take place in China. This list of sectors also includes the communications equipment industry, which, as per the details of today's report, is estimated to take a $5.3 billion hit from coronavirus-related disruptions in China.
As seen in data compiled by the United Nations, one-fifth of the impact that global communications equipment exports will face from the coronavirus will be felt by Singaporean companies. In second place is Vietnam, with the United States being a distant seventh as far as disruption to communications equipment exports goes.
Moving aside from communications equipment to take a brief look at exports in other industries shows that it's the European Union that is set to bear the brunt from the coronavirus. The bloc is set to take the greatest hit in exports in ten of the thirteen categories surveyed by the United Nations, in an outcome that's bound to have serious effects on the EU, its population and its economy.
Today's report comes at a time when some quarters have started to report that the bulk of the disruption from the coronavirus is behind us. Cupertino tech giant Apple Inc's primary supply chain partner Foxconn has stated that it should ramp up production back to peak levels by the end of this month; even as Apple's suppliers such as Qorvo Inc and Skyworks Solutions, Inc revise their revenue and earnings per share estimates for the current quarter.
Overall, the total impact on global exports from the coronavirus stands at roughly $47 billion according to the United Nations. And even though tech is believed to be at the forefront of the disruption, today's data shows that the precision instruments indsutry is the one most exposed to COVID-19's aftermath.