On top of the obvious concerns over the loss of human life and disruptions to daily routines, the growing coronavirus crisis could soon wreak havoc in the global electronics industry. Personnel shortages and delayed reopening of currently shuttered plants could reduce production of electronics parts such as memories and displays, as well as consumer electronic products such as smartphones.

Online reports and information from industry analysts revealed that Wuhan—the city at the epicenter of the coronavirus outbreak—is a vital cog in China’s leading global role in electronics industry production of both subassemblies and finished goods for leading companies. There’s perhaps no better example than Apple, which produces iPhones in China. Analysts at IHS Markit technology research, a part of Informa Tech, and at IDC said the coronavirus could create supply-chain problems for Apple and other smartphone makers that could disrupt overall shipments.

Industry analysts note that many smartphone chips are fabricated in Taiwan and China. With Wuhan and other major Chinese cities restricting travel in an effort to contain the virus, workers could be prevented from reporting to their jobs.

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Wuhan has a population of 11 million people and is considered a major China hub for industry and transportation. According to a recent article on the Tom’s Guide website, Wuhan is a hub for producing automobiles, electronics, optics, and fiberoptics, with 230 of the Fortune 500 companies having investments in the area.

Because China is a major producer of smartphones, the specter of diminished smartphone production is of little comfort to an electronics marketplace already dealing with depressed smartphone sales.

The most obvious is Apple’s iPhone. While the factories that make that phone—in Zhengzhou and Shanghai—are more than 300 miles from the Wuhan, veteran industry analyst Patrick Moorhead was quoted as saying in the Tom’s Guide article that any delay in obtaining raw materials, fabrication, assembly, test, and shipping could seriously disrupt smartphone production.

According to the article, any supply-chain disruptions stemming from coronavirus could adversely impact the release date of Apple’s iPhone SE2, the company’s new smaller iPhone that is projected to be a major seller.

Memory market

Coronavirus could also wreak havoc with the all-important memory chip market. An article on MarketWatch quoted several analysts as saying that several Chinese memory suppliers, including Yangtze Memory Technologies Co. and Wuhan Xinxin Semiconductor Manufacturing Corp. have operations in Wuhan. Cowen analyst Krish Sankar noted that Yangtze Memory Technologies is China’s leading NAND flash memory producer.

The current Lunar holiday might alleviate the situation temporarily, Sankar was quoted as saying in an analyst’s note. “While the Lunar holiday period is typically a slower time for business activity, the likely extended period of time to address the coronavirus and save lives could affect manufacturing activity at Yangtze Memory and potentially other fabs throughout China if the delivery of supplies and new fab tools is hindered or temporarily halted,” Sankar wrote.

Display industry in trouble

Perhaps no electronics sector could be affected more by coronavirus than the display industry, which has a number of China-based fabs. According to DSCC, a market research firm specializing in the display sector, Wuhan has become a major hub for display manufacturing with LCD and OLED fabs either already in production or slated to start production in 2020. DSCC projects Wuhan as accounting for 6% of worldwide mobile OLED capacity, 3% of mobile LCD capacity and 2% of LCD TV capacity, according to the firm’s Quarterly Display Capex and Equipment Market Share Report. Those figures are projected to rise to 9% of mobile OLED capacity and 4% of LCD TV capacity in 2021.

Market research firm IHS Markit said that leading Chinese panel makers stated they believe that total capacity utilization for all LCD fabs in the country could fall by at least 10% and perhaps by more than 20% during the month of February. With China expected to own 55% of global display manufacturing capacity in 2020, the immediate impact of the production reduction has been a worldwide decrease in availability and an increase in pricing for LCD-TV panels. This has resulted in turmoil throughout the display supply chain as suppliers and purchasers alike scramble to adjust to swiftly changing market conditions.

“Display facilities in Wuhan currently are dealing with the very real impacts of the coronavirus outbreak,” said David Hsieh, senior director, displays, at IHS Markit technology research. “These factories are facing shortages of both labor and key components as a result of mandates designed to limit the contagion’s spread. In the face of these challenges, top display suppliers in China have informed our experts that a near-term production decline is unavoidable.”

DSCC also noted that 5 million of the 11 million Wuhan residents left the city for Lunar New Year, and cannot return until the travel ban is lifted. This could affect the display plants’ ability to maintain proper staffing. DSCC noted that the Lunar New Year holiday was extended to February 10, with the lock down in Wuhan expected to be extended to at least the end of February.

Some companies with display manufacturing operations in Wuhan include China Star and Tianma in mobile displays and BOE in LCD TV panels, according to DSCC. Corning also has a glass melting plant next to BOE’s G10.5 LCD TV fab.

Capital expenditures for expanding display production will also be at risk, according to DSSC. The firm noted that planned equipment installations at companies such as BOE could be postponed as equipment supplier engineers are delayed in returning.

DSCC expects display production disruptions to have a ripple effect on smartphone manufacturers. China Star’s OLED customers include the Motorola Razr phone. Other China Star and Tianma Wuhan OLED customers include LGE and Xiaomi. Wuhan is the only location for China Star’s mobile OLED production and Tianma’s flexible OLED production.

The saving grace, DSCC noted, is that current oversupply situation in the display industry will stabilize with prices increasing rather than falling. There’s evidence a reversal of recent price decreases may already be occurring.

According to IHS, leading Chinese suppliers of LCD panels for TVs, notebook PCs and PC monitors now are planning to raise panel prices more aggressively. For example, the price for an open-cell LCD-TV panel was originally expected to rise by $1 or $2 per month in February. However, the actual increase may be $3 to $5 for the month.