A roundup of the coronavirus outbreak's impact on the tech sector, from closures of offices, stores, and factories in China to affecting MWC attendance

The outbreak shows that what impacts China impacts everything — The tech sector is currently feeling the impact of the coronavirus …

The Verge 2020-02-09 Natt Garun

Context & Ripple Effects

By early February 2020 the outbreak had moved from a health story to an operations story for tech: The Verge's roundup catalogs closures of offices, stores, and factories across China alongside the first visible casualty on the events calendar, Mobile World Congress. Within days the MWC exodus snowballed, with Facebook, AT&T, Cisco, Sony, Intel, Amazon, Nvidia, and MediaTek among the companies skipping the Barcelona show entirely.

The pattern was not new — Tech in Asia had traced how a 2015 drop in China's stock market rippled through tech balance sheets — but this time the disruption was physical rather than financial. A month later the New York Times confirmed the arc: cancelled conferences, supply chain and sales disruptions, murky outlooks for online travel firms, and the first sign of Zoom's rise as work went remote.

First-order effects

Chinese factories, offices, and retail stores closing means hardware production and sales stall immediately for any company whose build or launch calendar runs through China.
MWC exhibitors and attendees face cancelled meetings and wasted booth spend, with the show's value collapsing as the withdrawal list grows.

Second-order effects

Event organizers lose the anchor tenants that justify the format, pushing vendors toward virtual launches and remote demos as substitutes.
Companies dependent on Chinese manufacturing face delayed shipments and revenue shortfalls, while collaboration software like Zoom picks up displaced demand from cancelled travel and closed offices.

Third-order effects

If the pattern holds, tech's concentration of manufacturing and marquee events around China becomes a standing risk factor that boards and supply planners price in, accelerating diversification of production footprints — a dynamic later visible when half of Apple's top 200 suppliers clustered near Shanghai were hit by lockdowns.
Labor effects split along company size: large Chinese tech firms recruit through the disruption while smaller online firms cut jobs and freeze hiring, widening consolidation pressure in the domestic sector.

The trend: The pandemic is forcing tech to reprice its dependence on China for both physical supply and industry convening, one closure and one cancelled conference at a time.

Discussion

@matthewhughes Matthew Hughes on x
Nvidia is the latest firm to pull out of MWC. At this point, I'm doubting whether the event will actually take place. https://www.theverge.com/...
@cate_long Cate Long on x
“Foxconn's delayed return to work will be a warning sign to other electronics suppliers, as the Taiwanese manufacturing giant has been taking aggressive steps to prevent the spread of the virus.” Major supplier of 🍎will remain shut due to #coronavirus. https://asia.nikkei.com/...
@colgo Paul Colgan on x
Foxconn not going back to work. “Violation of epidemic prevention and control could potentially face the death penalty,” [an] internal meeting memo seen by the Nikkei Asian Review said. https://asia.nikkei.com/...
@andyboxall Andy Boxall on x
The latest #MWC2020 dropout is Nvidia, which has sent out a statement saying it will not send any employees to the show, stating, “public health risks around the #coronavirus,” as the reason. Nvidia is a sponsor of the show. https://blogs.nvidia.com/...
@onlyyoontv Eunice Yoon on x
“The operation schedules for our facilities in China follow the recommendations of the local governments.” - latest statement by @Apple supplier #Foxconn on when its factories would reopen in #China amid the #CoronavirusOutbreak. https://asia.nikkei.com/... https://twitter.com/..…
@superglaze David Meyer on x
After Ericsson and LG withdrew from MWC Barcelona (and the latter from a big Amsterdam trade show too), the WHO told Fortune it was “not currently requesting that large gatherings are cancelled”. https://fortune.com/... #Coronavirus
@iikkakorhonen Iikka Korhonen on x
Big. “...coastal Shenzhen serves as its Chinese headquarters and the majority of the tens of thousands employed there are out-of-towners. The company also assembles a small portion of iPhones there.” https://twitter.com/...
@qtrresearch @qtrresearch on x
Foxconn in Shenzhen closed “until further notice” https://twitter.com/...
@jmulvenon James Mulvenon on x
“China Mobile [sent] text messages to Beijing residents telling them they can check where they have been over the past 30 days.” Reuters: Coronavirus brings China's surveillance state out of the shadows https://www.reuters.com/...
@jchengwsj Jonathan Cheng on x
Sign of the times: Foxconn, the giant manufacturer of iPhones, is pivoting to making surgical facemasks. https://www.bbc.com/...
@mattrosoff Matt Rosoff on x
The coronavirus shutdown in China won't just affect manufacturing production now — it could create cascading delays that affect the holiday season, as @@kifleswing explains here, and some analysts expect the impact to hit Apple's next iPhones. https://www.cnbc.com/...
@caro_milanesi Carolina Milanesi on x
Some people are suggesting to postpone #MWC but I struggle to believe that is an option considering the financial investment it would entail canceling and rebooking travel, venues...
@psb_dc Theo on x
Nvidia becomes the fourth exhibitor to partially or fully drop out of MWC 2020, following Ericsson, LG, and ZTE. #MWC2020 https://www.theverge.com/... via @Verge
@frankie_tech Frankie Herrera on x
Wow first LG, then Ericsson and now Nvidia. How many more companies are going to pull out of this show before it's all said and done? #MWC20 https://twitter.com/...
@tomwarren Tom Warren on x
Nvidia is out of MWC. It was one of the shows big sponsors around AI https://www.theverge.com/...
@javierblas Javier Blas on x
Further evidence that China isn't returning to work on Feb 10. Top iPhone maker Foxconn told by Beijing to keep close its huge factories — or else | #CoronaVirus #OOTT #commodities via @NAR https://asia.nikkei.com/... https://twitter.com/...
@aparanjape Amit Paranjape on x
“The (global) tech sector is currently feeling the impact of the coronavirus, with companies closing offices, stores, and factories in China as well as restricting employees from nonessential travels to the country.” https://www.theverge.com/...
@rdrv3 David Ruddock on x
IMO the only thing that could get MWC cancelled at this point is protests in the city of Barcelona related to coronavirus. No sign of any public unrest at this time, and WHO is reporting a decline in case growth in China. I think it's gonna be fine, Ericsson et al or not.
@gsma @gsma on x
GSMA Update Information on Coronavirus http://r.socialstudio.radian6.com/ ... https://twitter.com/...
@andyboxall Andy Boxall on x
#MWC20 is still going ahead, but Ericsson will be missed, says GSMA. Like it or not, #coronavirus will be a main topic of conversation there. Which makes me wonder what the Spanish government is thinking? Stricter arrival controls will add more problems. https://www.gsma.com/...
@uploadvr @uploadvr on x
Facebook stopped accepting new orders for Oculus Quest this week, and expects an impact by the Coronavirus on production of the standalone headset. https://uploadvr.com/... https://twitter.com/...
@markgurman Mark Gurman on x
New: Apple extending store closures in China due to coronavirus. This could last until Feb 15 at some stores. Corporate offices still opening week of Feb. 10. “Our first priority is the well-being of our teams, supplier partners and customers,” Apple says. https://www.bloomberg.c…

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