Electronics manufacturers are facing delays of several weeks for parts shipments because of COVID-19. That means the availability of tech products in the summer of 2020 could be severely limited.
About two-thirds of electronics makers and manufacturers report that their suppliers from China have told them to expect shipment delays. Most agencies expect the issue to create a supply chain delay of 4-6 weeks, but the impact could be more severe if coronavirus lockdowns continue into the fall for some countries.
Electronics trade group IPC survey about 150 of its members to generate the data. Respondents included sellers, suppliers, and manufacturers of electronics ranging from cable boxes to lawnmowers.
Most EU and US Manufacturers Rely on Chinese Inputs
Although American and European electronics manufacturers finish their devices in domestic factories, the inputs needed for the final assembly often come from China. When delays in these parts happen, then the issue impacts the rest of the supply chain.
You must have the raw materials available to create finished goods. There is still enough of a labor force operating to do the assembly work, but the shutdown in China since January has limited parts availability.
All of this is happening while financial markets experience turmoil because of the uncertainty of what the coronavirus causes to global communities. Fears that extended shutdowns have caused markets to lose over 20% or more of their value, wiping trillions away in corporate and personal savings. Many companies have even warned investors that financial targets are going to get missed because of COVID-19.
The Tech Industry Isn’t as Adaptable
Companies like Ford are changing their production process to make items that communities need. Instead of making automobiles, their workers are creating ventilators that can help to treat people with severe COVID-19 symptoms. The tech industry isn’t that adaptable because the supply chain for superconductors and other parts requires a specific setup.
Because of the virus outbreak, most Chinese suppliers and factories stayed closed for longer than expected. Quarantines for workers and travel restrictions hamper the ability of the country to reach full productivity, even if most of the societal changes are in a single province.
Some companies are looking at other countries as a temporary solution to source their materials. Even if this effort is successful, the work it takes to switch a supply chain can be arduous.
Then there is the fact that the coronavirus spares no one. Although Italy, Spain, and the United States are hot spots for infections after China has managed to get it somewhat under control, finding available resources in this climate may not be possible. Only Africa has limited issues with the pandemic, but the continent generally lacks the infrastructure needed to supply components to companies like Apple and Microsoft.
Once the parts do start getting made once again, changes to transportation networks because of the virus could still create problems. Many firms are reliant on logistic carriers that have a backlog of orders to fulfill because of travel restrictions that exist.
It may take 12 months or more to restore the global economy. That means we must continue to work together to manage all of our needs.