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Will semiconductors be taking a hit from the coronavirus?

Gartner 31 Jan 2020 04:20

As flights are grounded, cities locked down, and cruise ships put into quarantine it’s sometimes hard to focus on business as usual. However, the rest of the world continues to turn, and we have to consider how coronavirus will impact business, including our business.

The disruption in manufacturing and supply chain, caused by measures intended to reduce the rate of infection, is already having an impact on some companies, and this will grow as inventories diminish. In the longer term those infection-control measures will also have an impact on product demand, especially where retail outlets have closed and earnings will be lower.

We do have some precedent, in the Severe Acute Respiratory Syndrome (SARS) outbreak that started in southern China in 2002, but there are significant differences worth noting. SARS is more fatal; killing as many as 10% of those infected, but is only infectious once symptoms show (while coronavirus seems to be infective during the incubation period). SARS lasted around six months, and the estimated impact on the Chinese economy was a 1% drop in GDP, but coronavirus hit in the middle of the holiday season when travellers carried the disease across the country (and beyond) so we should expect the impact to be greater.

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