How COVID-19 has wrecked 2020 for tech industry

Shares of technology companies on the stock market have suffered following closures of stores, cancellation of events and delay of products

BY ANTONY MUTUNGA

Since the outbreak of the corona-virus late December last year, China has witnessed more than 4,000 deaths and counting. The country’s economy has also taken a beating as the virus, code-named as COVID-19 has caused countless factories to close down for an unknown period and flights to several cities in the country to be grounded.

To control the outbreak, the Chinese government has also resorted to disinfecting and destroying cash from affected areas and in turn issuing new currency.

With the virus also affecting different areas around the world, especially Europe, several industries have been hit hard as a result. It has taken its toll on the tech sector worldwide as many stores and offices are temporarily shut down, travels are limited as well as the global supply chain is disrupted.

Major corporations such as Google, Samsung, Apple, and Microsoft saw their stores and factories in China remain closed for close to two months and now with the epidemic going up all over the world, the companies are taking a similar step with their stores worldwide.

Apple has decided to close all its stores outside great China for two weeks in a move to reduce the spread of the virus. Apart from seeing its sales drop due to the close, the iPhone maker has also seen the supply of its biggest earner, the iPhone decline since the start of the year as it relies on several Chinese factories, which were highly disrupted by the epidemic.

This goes hand in hand with a report by TrendForce, a global provider of market intelligence in the tech industry, which says that the pandemic has a relatively high impact on the Smartphone industry. According to the report, the Smartphone supply chain is highly labor-intensive and with the pandemic disrupting workflow, Smartphone production for the first quarter of 2020 is expected to decline. TrendForce forecasts that it will go down by 12% year on year, making it the quarter with the lowest output in the past five years.

Apple is not the only tech giant facing a rough time; Microsoft has also been highly affected. Despite not having any products other than the surface computers made in China, most of the computers that use Microsoft Windows are made there. Thus, with the factories dealing with computer manufacturing on a slowdown, Microsoft’s revenue has taken a hit and the company has declared it will not meet its forecasts.

The spread of the coronavirus is also expected to delay the development schedule of 5G, especially in China. With the largest concentration of fiber optics supply chain in Wuhan, China, the epicentre of the COVID-19, supply of quantity and quality of optical fiber cables, which 5G base stations need in high demand, is greatly threatened. The disruption will cause the country to postpone its timelines until work schedules completely return to normal.

Apart from this, COVID-19 has also caused some major technological events and conferences to be postponed or cancelled altogether to contain its spread around the globe. The world’s largest exhibition for the mobile industry, the Mobile World Congress (MWC), which was to take place in Barcelona between February 24th and the 27th was cancelled by the GSM Association (GSMA), which organizes it. The MWC, which is hosted in Barcelona every year started in 2006 and convenes the industry, governments, ministers, policymakers, operators and industry leaders across the broader ecosystem.

The GSMA cancelled the major event following a variety of companies and exhibitors including Amazon, Facebook, HMD Global, Intel, LG, Nvidia, Orange, Rakuten, Sony, Vivo, Vodafone, and Western Digital pulling out of the congress. This is expected to hurt a lot of people as the event generates over 14,000 part-time jobs and has a big economic impact of Sh56.3b (492 million Euros).

Other than the MWC, the gaming industry has also been hurt as several major companies pulled out of this year’s Game Developers Conference (GDC) that was meant to take place last month leading to its cancellation as well. Some of the companies to pull out include Sony, Facebook Gaming and Oculus. For those who had already purchased their passes, they are expected to get back a refund and for those who had made hotel reservations, they will get back their payments without incurring any fees.

The pandemic has already affected several technology companies as their shares on the stock market have suffered following closures of stores, cancellation of events and delay of products.

Some companies in the sector have however managed to help people by ensuring they are up to date on the spread of COVID-19 and even though this has been crucial, it has also seen some fake news about the pandemic reaching a majority of the people.

The tech and social platforms such as Facebook need to put up regulations and policies that highlight how people will interact on their platforms. With the coronavirus now spreading all over the world, the tech sector has not seen the last disruption. It is time the sector came up with measures to ensure that the negative impact the pandemic has brought about does not endure.

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