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Smartphone output to slide as coronavirus shuts Chinese factories | Business


The coronavirus crisis will slash global smartphone production in the first quarter, according to new industry forecasts, while consumer confidence in Europe has also suffered as the spread of the disease wreaks havoc on multiple industries.

The outbreak has forced smartphone factories across China to shut down as officials impose restrictions on travel and large groups of people assembling in one place.

The analysis firm TrendForce predicted that 275m smartphones will be made in January-March, down 12% from 310m in the first three months of 2019. Apple’s production will fall 10%, it estimates, while Huawei will be 15% lower.

“Delayed resumption work and uncertainties in employees’ returns will cause the monthly delivery of key components to be postponed, thus affecting the progress of smartphone production,” TrendForce said.

Separately, the research firm Canalys predicted that sales of smartphones in China could halve this quarter as many retail shops are closed and production has been hit.

The Apple supplier Foxconn, which has switched some of its production lines to make surgical masks for its own staff, received government approval on Monday to resume production at a plant in the city of Zhengzhou but its major plant in the Longhua district of Shenzhen, as well as others, remains closed.

According to Nikkei business daily, government officials feared that Foxconn’s factories have a “high risk of coronavirus infection” because of poor airflow and central heating systems.

In the eurozone, investor morale has fallen for the first time in four months, according to the research group Sentix, which blamed anxiety about the outbreak’s impact on global trade.

The Sentix managing director, Manfred Huebner, said: “While at the beginning of the year there was still a clear upswing scenario for the global economy, the outbreak of the coronavirus in China has changed the situation significantly.

“The drastic measures taken by the Chinese government for the Hubei region show the danger to the global economy if the outbreak cannot be limited regionally.”

Sentix’s euro-area confidence measure dropped to 5.2 in February from 7.6 in January but remains higher than last autumn, when the index was dragged negative by trade war fears.

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Other industries with sizeable manufacturing operations either in China or dependent on the parts it produces continue to suffer, with shutdowns affecting everything from fashion to restaurants and the automotive industry.

On Monday, Nissan said it would temporarily suspend production at its Kyushu manufacturing plant in south-west Japan, in the latest sign of strain in the global supply chain. Last week the South Korean carmaker Hyundai halted production lines because of a shortage of parts from China.

Chinese inflation has jumped to an eight-year high, climbing to 5.4% per annum in January from 4.5% in December.

The rate is likely to remain high for months, according to Nomura analysts, as the coronavirus affects supplies and encourages families to stockpile goods.

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