Coronavirus outbreak starts to hit tech industry

Graphics cards, motherboards, Apple iPhones and Nintendo consoles all affected by measures taken to combat the spread of Coronavirus

The outbreak of Coronavirus in China is starting to affect the global technology industry, with reports that shipments of devices, such as graphics cards, are set to drop.

That's according to sources at companies like Asus, Foxconn and Gigabyte, who claim that first quarter shipments of motherboards and graphics cards have dropped by more than anticipated, according to Taiwanese industry newspaper Digitimes. They claim it is due to people in China avoiding public places, such as shops, as far as possible, while delivery and other services have also been affected.

The smartphone market, meanwhile, is expected to be affected in two ways: first, with an inventory glut in China caused by the sudden and otherwise unexpected decline in sales in China, the world's largest single market for smartphones. China accounted for more than a quarter of global smartphone sales last year and Gartner had forecast a modest three per cent increase in worldwide sales this year.

Huawei, in particular, is likely to be hard hit as it fell back on its home market due to the impact of US sanctions. Sources quoted by Patently Apple suggest that its sales channels in China have been "crippled" as a result of action taken to contain the spread of the virus.

Second, due to the hiatus in supply chains, caused by factory closures, production of new models has also been affected. Contract manufacturer Hon Hai Precision Industry, better known as Foxconn, has warned that quarantine measures imposed at the main base where it makes Apple iPhones will affect production.

Apple is expected to release a new cut-price iPhone early this year and the measures could affect its ability to ramp-up output to meet anticipated early demand.

Hon Hai also makes products for PC maker HP Inc and electronics giant Sony. Other contract manufacturers operating in China, including Inventec and Quanta, have also been affected. A number of factories have been closed and are expected to restart production on 10^th February. However, the virus still appears to be spreading and that date may be put back.

Taiwanese fabless semiconductor company MediaTek has also warned that its first quarter sales are likely to fall by as much as 15 per cent. Sources attribute this to the sharp decline in sales in China's smartphone industry. TSMC, however, which is larger and more diversified claims to be relatively unaffected so far.

Games console company Nintendo, meanwhile, has been among the first companies to publicly warn of an impact on production, with shipments of its popular Switch console and peripherals, such as its Joy-Con controllers, being delayed as a result. The company is considering switching production from China to Vietnam to alleviate shortages, according to Bloomberg.

At the moment, though, the hiatus is only affecting Nintendo's shipments of products to Japan, with the US and Europe unaffected, the company added.