A worker attaches a component to a circuit board used in a liquid crystal display (LCD) screen for Boeing Co. aircraft at the Rockwell Collins Inc. production facility in Manchester, Iowa.
Daniel Acker | Bloomberg | Getty Images
Factories in China are the center of the electronics industry’s supply chain, and manufacturers are increasingly worried that disruptions linked to the COVID-19 coronavirus could delay production for weeks.
Manufacturers anticipate that products shipments may be delayed by weeks according to IPC, a trade group that represents contract manufacturers and other suppliers of electronic parts, as well as some OEMs, which are the brands that contract with those companies to make their products.
On average, manufacturers surveyed by IPC have been told to expect three-week delays from their suppliers, but privately expect longer delays, the trade group said. The average expectation was five weeks, and some companies expect delays longer than nine weeks. Overall, 84% are concerned about delays related to the outbreak.
Electronics are complicated products, often with hundreds of different components and sub-suppliers, and one missing part or slowed factory often ripples and causes issues and delays, which causes shortages of the finished product. Even if manufacturing is done in regions that haven’t been affected by the coronavirus, those products often use parts or sub-assemblies made in China.
“Manufacturers have been concerned, and while they’re looking at all the other alternatives, they do worry about and see delays,” said Shawn DuBravac, chief economist at IPC. “They see any disruption as concerning, or anything that leads to downtime.”
The survey got 150 responses and was conducted between Feb. 11 and Feb. 16, but the situation continues to change quickly. Since then, South Korea, a key electronics manufacturing country, has seen a surge of COVID-19 cases, for example.
In comments published by the IPC, some contract manufacturers said they are trying to find alternative suppliers outside of China and are facing manpower issues.
Several major electronics companies have recently warned that supply of finished products will be constrained by the coronavirus. Apple warned earlier this month that it would miss its estimate for March quarter revenue due to constrained supply of its products, which are largely manufactured in China. HP, the second largest PC maker, also cut its earnings guidance. Lenovo is the largest PC maker by unit sales, and its COO Gianfranco Lanci said on a conference call last week that “the entire industry will not have enough supply.”