International. According to omdia's latest analysis, the coronavirus is spreading through global technology supply chains, impacting various interconnected sectors of the electronics industry.
With the epidemic coming to dawn from the main 5G deployment phase, the coronavirus has the potential to disrupt the progress of the next-generation wireless standard, as the crisis slows down or threatens to delay production of key components for smartphones, including displays and semiconductors, according to Omdia.
Amid this rapidly unfolding crisis, Omdia analysts are turning their attention to how the coronavirus is affecting both demand and supply, closely examining the constituent supply chains for the global 5G smartphone market. The following Omdia update presents the latest findings discovered by our experts regarding the impact of the coronavirus on 5G and other technology segments.
5G at risk
The global 5G value chain is projected to generate $3.6 trillion in economic output and support 22.3 million jobs worldwide by 2035. As a result, the risks to players across the tech industry's value chain could not be greater.
Chinese Smartphone Market Weakens
China is the world's largest smartphone market, with a 27 percent market share in 2019, according to The Mobile Phone Database: Omdia Country Report.
In its third-quarter forecast update, Omdia predicted that the Chinese market would stop falling and begin to recover in 2020. However, due to the coronavirus crisis, Omdia now believes that the Chinese market is likely to suffer another contraction in unit shipments.
The number of smartphones shipped to China annually is expected to decline to 373.9 million units in 2019, a 4 percent decrease from 390.8 million units in 2018.
The biggest negative impact will be felt in Chinese domestic sales. As the outbreak period drags on, the weakening demand will spread to other regions.
The extent of the impact will depend on the duration of the epidemic. Omdia is currently evaluating different time scenarios and their expected impacts on chinese smartphone demand.
Screen production dropped in February
In a new update on February 11, Omdia's display service estimates that china's use of display fabs decreased by 20 to 25% in February. However, the country's production and production will fall by 40 to 50 percent due to component shortages.
The manufacture of display panels used in products including 5G smartphones has been significantly affected by the coronavirus epidemic, and suppliers are facing labor and component shortages.
After the government-extended Lunar New Year holiday shutdown, most display panel manufacturers with manufacturing operations in Wuhan and elsewhere in China resumed operations starting Feb. 3. However, numerous employees and workers remain unable to return to their workplaces due to travel restrictions in China, reports.
LCD polarizers and LCD module printed circuit boards (PCBs) are now in a situation of shortage due to production bottleneck and also due to logistics issues. Panel manufacturers are dealing with a low inventory of polarizers. This problem persists even after the resumption of production in most facilities.
Gaming market influenced by coronavirus
The impact of the coronavirus has had a largely positive effect on player participation and gaming spending in the Chinese gaming market. However, when considering the supply chain disruption caused by contagion, the overall effect on the global market is negative.
For the period from January 12 to February 10, according to Priori Data, daily active users (DAUs) of iOS mobile games increased at a healthy pace of 5.3%, while net revenue increased by 5.2%, due to Lunar New Year sales. and quarantined users cannot leave their homes.
However, over the past seven days, revenue growth has flattened.
Comparatively, for location-based titles, the effect has been more severe. For example, the daily net income of Let's Hunt Monsters, the Chinese equivalent of Pokémon Go, suffered an 83 percent decline over the past 10 days, reaching an all-time low.
Overall, the Chinese government's move to extend the Lunar New Year holiday helped increase user engagement with legacy titles and increase spending on the game. As a result, we are likely to see an increase in China's PC gaming market in the first quarter, but this is unlikely to reverse the overall downward trend in the PC gaming market in the region.
Constant semiconductor supply for now, but the risks are increasing
So far, Omdia has not detected any impact of coronavirus on the supply of semiconductors used in 5G smartphones and other products. However, the epidemic raises some serious long-term concerns. If the coronavirus continues to spread and cause major public health problems in China, electronics manufacturers in the country may be forced to slow manufacturing or even shut down some operations. This could have a significant impact on the global supply of semiconductors.
As for China's major semiconductor foundries, the share of revenue they get from domestic customers is significant. If there is a slowdown in manufacturing within China, it is likely to affect not only chip suppliers, but also companies that buy large volumes of chips to produce final products. These companies include electronic manufacturing service providers (EMS) and original design manufacturers (ODMs).
