COVID-19 Disrupts Electronics Supply Chain
Jacob Bourne posted on May 15, 2020 |
Full impact is unknown, but the reopening of markets and consumer growth forecasts well.

The COVID-19 pandemic has caused broad and significant disruptions to the global supply chain of goods and caused economic losses in the trillions of dollars. Some have blamed the shortages of personal protective equipment (PPE) and ventilators for the loss of life as they are needed to help stop the spread of the disease and keep those who are infected alive.

In March there was heightened concern that the supply chain disruptions caused by efforts to address the pandemic, which shut down economic life in many countries around the world, would disrupt the ability to produce electronic devices, as well as distribute and sell them to consumers. For example, Sony Electronics reported early supply chain difficulties stemming from the temporary closure of manufacturing plants in China and Malaysia, with supply chain delays continuing even after the plants reopened. Deloitte published a report stating that, “COVID-19 might become the black swan event that forces the semiconductor industry to transform its global supply chain model.”

A series of reports by the Electronic Components Industry Alliance’s (ECIA’s) Chief Analyst, Dale Ford, show the results of industry surveys indicating pessimism about the supply chain impact caused by COVID-19. An April survey showed that concerns about raw material supply declined from March, but that concern about the impact on the production of electronic components increased by 12 percent. Additionally, the April report showed that a majority of respondents thought that the impact of government quarantine measures on company operations was moderate.

The ECIA’s May report describes how small businesses that serve as manufacturer representatives play a key role in the distribution of electronic components and how they have been impacted by the COVID-19 economic shutdown. The report further describes how the shutdown has had a cascading effect on suppliers and customers globally. The report suggests that all the businesses have been impacted to some degree and that 90 percent of respondents expect a serious to severe impact on their businesses over the next two to three months.

Despite the continued disruptions to businesses, the flattening of the infection curve in China and the subsequent reopening of that country’s economy prevented the more serious concerns about supply chain disruptions from materializing. While the economy is still struggling, data from Luminati Networks and QuickLizard suggests that sales of consumer electronics such as tablets and laptops have increased 900 percent year-over-year due to the increase in people working and learning from home.

Some companies have fared better than others during the pandemic shutdowns. Apple notably has recently released a slew of new products, including the iPhone SE, with strong sales reported so far. Like many retailers with storefronts temporary shuttered, Apple has made up for the loss in sales at its stores by shifting activity to e-commerce. Foxconn, Apple’s main manufacturing partner based in China, reopened its factories in March following a shutdown, with added safety measures in place to protect against COVID-19. In anticipation of the release of the iPhone 12 later this year, Foxconn factories reportedly plan to boost manufacturing and hire more workers.

Apple announced on April 30 that its quarterly earnings increased by 1 percent from last year. Meanwhile, Honeywell’s revenue came in at 5 percent lower than last year, with supply chain issues viewed as the culprit.

“Despite COVID-19’s unprecedented global impact, we’re proud to report that Apple grew for the quarter, driven by an all-time record in Services and a quarterly record for Wearables,” said Tim Cook, Apple’s CEO. “In this difficult environment, our users are depending on Apple products in renewed ways to stay connected, informed, creative, and productive. We feel motivated and inspired to not only keep meeting these needs in innovative ways, but to continue giving back to support the global response, from the tens of millions of face masks and custom-built face shields we’ve sent to medical professionals around the world, to the millions we’ve donated to organizations like Global Citizen and America’s Food Fund.”

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