Beyond the obvious human tragedy, including lives lost and communities disrupted, it’s clear that the coronavirus outbreak is going to impact several industries including the electronics industry. The impact is expected to be much more severe than the SARS outbreak in 2003. As reported in an assessment in early February by IHS Markit entitled “Coronavirus Rolls Through Global Economy – Impacts on GDP,” at the time of SARS, China was the sixth largest economy, accounting for only 4.2% of world GDP. China is now the world’s second largest economy, accounting for 16.3% of world GDP. That means that any slowdown in the Chinese economy reverberates across the globe.
At the time of writing this, it’s not certain when confinement measures will be lifted, and that will telegraph how severe the effect of factories going idle will affect 2020 GDP. Assuming they’re not lifted until March, IHS Markit predicts that the resulting economic impact will be concentrated in the first half of 2020, with a reduction of global real GDP of 0.8% in Q1 and 0.5% in Q2. In this scenario, the coronavirus and resulting measures will reduce global real GDP by 0.4% in 2020, says IHS.
We’re already hearing from some of our friends in the embedded board industry that some companies are being more cautious when promising ship dates because of the potential impact of the coronavirus epidemic on product shipments. For products primarily built in China, shipping dates in the Spring timeframe are now in doubt.
An early February New York Times story “SARS Stung the Global Economy. The Coronavirus Is a Greater Menace,” by Peter S. Goodman, provides an informative overview of the many impacts of coronavirus on the world economy. One interesting area discussed in the article is the symbiotic relationship between the China and the US technology industries in this day and age. The American semiconductor industry is particularly entrenched in China, which is both a major manufacturing hub and a market for its products. Intel’s customers in China accounted for about $20 billion in revenue in 2019, or 28% of its total for the year,” says Goodman. “Qualcomm, the dominant maker of chips for mobile phones, is even more dependent on China, drawing 47% of its annual revenue—or nearly $12 billion—from sales in the country.”
The article also discusses the supply chain impacts of the crisis. “… the effects of the virus on supply chains, which have grown notoriously complex, are difficult to anticipate. A single part of an advanced product like a smart TV may be made of dozens of smaller components, with each of these assembled from other pieces.” The problem is tricky because companies themselves often do not know the suppliers that are three and four rungs down the chain. Apple, for instance, assembles most of its products in China. The company disclosed much wider volatility in its potential revenues for the current quarter in the face of uncertainties around factory production and sales of its products.
As seems to always be the case with the electronics technology industry, while it’s being shaken by world events, it is simultaneously offering potential solutions to the very same crisis. A piece by Frost & Sullivan’s Dilip Sarangan entitled “The Next Generation of IoT— Addressing the Coronavirus and Preventing Future Outbreaks” outlines his view on how IoT could play a role in preventing future disease outbreaks, especially in the context of China.
“The first step in infectious disease control is detection,“ says Sarangan, “While a global network of sensors is unlikely to happen in the foreseeable future, China does have the ability to implement such a network in the country. China has a history of implementing wide-area IoT solutions (video surveillance) on a scale that has never been seen before. So why not a network of virus-detection sensors? Couple that with facial recognition and location, existing surveillance cameras to identify, trace, and monitor people that may have contracted the coronavirus. While this may sound like a police state to many, ultimately, leveraging IoT and AI may be the most logical way to prevent highly infectious diseases from spreading rapidly in a world that is getting smaller every day with air travel.”
PUBLISHED IN CIRCUIT CELLAR MAGAZINE• MARCH 2020 #356- Get a PDF of the issue