Your browser is out-of-date!

Update your browser to view this website correctly. Update my browser now

×

Coronavirus’ Impact on the Global CE Market

Futuresource provides research on how the virus is affecting consumer technology supply chains.

coronavirus

Efforts to halt the spread of the health crisis caused by the outbreak of the novel coronavirus (COVID-19), which has infected almost 100,000 people across 80 countries at the time of writing, has caused significant disruption to global supply chains. This, in turn, has dampened Chinese domestic demand. Given that the Chinese consumer electronics market accounted for 22 percent of the $1 trillion industry in 2019, any demand-side shocks will hurt vendors’ revenues. Constrained supply will further affect the global market, inhibiting global distribution and the ability for vendors to compensate for lost Chinese revenue in other markets.

Click here for updates on the coronavirus from LiveScience.

While there remains a range of unknown and unknowable variables around the virus, short- and long-term effects on consumer electronics and media entertainment industries will be significant. Through Futuresource’s initial research, observations and market feedback, a number of scenarios have been developed based on the current and future distribution from coronavirus.

Firstly, supply chain disruption to hardware vendors reliant on Chinese manufacturing will struggle, with delays in the supply chain leading to product delivery difficulties. They are likely to report poor Q1 performance as a result, a problem that may extend into Q2. Futuresource does, however, expect H2 of 2020 to somewhat if not completely compensate for the difficulties experienced in Q1 and Q2, with pent-up demand meaning that consumption patterns will see a shift in seasonality as opposed to an overall yearly decline.

Sign up for the Residential Systems daily newsletter to keep up-to-date all on the ways the coronavirus is impacting the custom installation industry.

In contrast, digital media platforms are benefiting from the crisis, with digital video, music, and gaming all seeing spikes in engagement. Retail trends towards ecommerce are also accelerating, while collaboration technology and software is also a beneficiary of the crisis. Besides being a short-term effect, this could have implications in the long run, as consumers are likely to continue engaging with these platforms after the virus is contained.

Futuresource believes it is likely the consumer electronics market will see a full year decline of 2-5 percent in retail value terms worldwide, while in the long-term, consumer electronics vendors will look to diversify their supply chains. Having already faced disruption in 2019 due to the Sino-American trade war, COVID-19 has further highlighted the risks associated with over-reliance on Chinese manufacturing.

The wider impact of the virus is also beginning to emerge. With 2020 GDP growth now estimated by the Chinese Bureau of National Statistics at 5 percent year-on-year, China’s economic performance could create wider uncertainty in a global economy that is still recovering from the range of headwinds it experienced in 2019, including the Sino-American trade war, Britain’s exit from the European Union, and a wide-ranging slowdown in developed economies. Global stock markets have experienced significant volatility as a result of the spread of COVID-19 into Europe. The Dow Jones and S&P 500 in the U.S. posted their most dramatic daily declines since 2018, while the U.K.’s FTSE 100 saw its sharpest contraction since January 2016. Conversely, the price of gold — a commodity that is widely viewed as a safe investment when the global economy is in a period of uncertainty — reached a seven-year high.

In a very short time period, COVID-19 has had a disruptive impact on individuals, countries, and major companies alike. Futuresource will continue to monitor the progression of the outbreak and provide further updates as the situation develops.

 

Close