The outbreak of Covid-19 that occurred in the early months of 2020 has now impacted more than 200 countries around the world and has significantly affected the global economy. The effects have been widespread, as one or multiple scenarios impinge on a country or other complementary markets in terms of emergency declarations in dozens of countries across the globe, which include travel bans and quarantines, resulting in widespread flight cancellations and restaurant closures. Coupled with significant slowdowns, via a pause or outright termination of new or ongoing construction and development projects, which have further created a failing sense of global business confidence, and thus affected a massive slowing of the global supply chain.
To summarize this last point more succinctly, the three main ways in which this economic impact can be felt are as follows:
- A direct effect on production and demand
- The creation of supply disruption and market uncertainty
- The resulting impact on financial markets and firms
MARKET SPECIFIC IMPACTS OF COVID-19
Due to the pandemic reaching all corners of the globe, many industries are feeling the effects, including a significant impact in manufacturing in the sectors of aircraft and automobiles, chemicals, and electronics. Of those, the industry most impacted could be the global wire and cable manufacturers, as the demand and availability for raw materials become increasingly scarce. Multiple reporting organizations including Argus and Transparency Market Research anticipate a decline that will result in anywhere from 1% – 3.5% contraction in the wire and cable market globally.
EFFECTS OF COVID-19 ON THE GLOBAL ELECTRONICS MARKET
This anticipated decline is due in part to multiple consumer electronics companies that stifled production operations to match the decline in consumer demand and further postponed new product rollouts. Further complementing the downturn in consumer spending is the current limitations on the supply chain increasingly impacting manufacturing or raw and source materials. China manufacturing company’s account for nearly 85% of the global output of components utilized for smartphones and nearly 75% of materials are needed for televisions. With the shutdown of factories, and a significant slowdown in production output, access to cabling, wires, led chips, and other critical components have also been a major contributing factor to the decline in this market across the globe. The decline in the availability of products has led numerous Chinese manufacturers to increase various component prices by 2-3%, further attributing to market slowdowns as costs rise.
EFFECTS OF COVID-19 ON REGIONAL MARKETS
Industry reports on the effects of Covid-19 on manufacturing are also detailed by regions, with the main focus on Asia-Pacific, Europe, and North America. China as previously mentioned rises as the most affected and again due to the various conditions of production slowdown due to shutdown and decline in demand. Within the European region, European automobile manufacturing companies are reported to be following this trend in similar ways. As governments contend with stopping or slowing the spread of the virus, many auto manufacturers have shut their doors and resulted in a production output slowdown. Although reasons may stem from a public health standpoint, this slowdown in manufacturing output, also results in a loss to global trade, with the most significant impacts felt at home, such as with the German auto companies.
The Covid-19 pandemic has affected many industries, and many regions, and will continue to do so for quite some time. Please make sure to check back on heltronics.com for more news and updates on the impacts of Covid-19 on the electronics industry.