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COVID-19 and the impact on technology markets

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As the current pandemic continues, COVID-19 and the impact on technology is becoming ever-more noticeable. The impact has already started with major brands such as Apple and Nissan reporting knock-on effects caused by production and supply chain dependency in China. Understanding when the outbreak can be brought under control will help determine the severity of market disruptions.

As for COVID-19 and the impact on technology markets, most major manufacturers depend on parts or production capabilities from China. However, China’s manufacturing capacity and workforce have been hit hard from the virus. As of February 20, China reported more than 75,000 people infected with COVID-19, with a majority of the workforce working remotely. Blue collar workers are starting to cautiously return to their manufacturing sites after being away for a while. The pandemic is placing tremendous pressure on the global supply chain, retail and service industries.

While some manufacturers and retailers are able to live off their stocks for a certain time, the scarcity of products will become an issue very soon. This is especially true for the tech industries even with manufacturing capacities in China starting to produce again. The question is whether consumers will be willing to postpone purchases of out-of-stock items or whether they will consider an alternative product that is available right away.

Even though some companies have already made plans to diversify their sourcing, the supply impact cannot be avoided in the short-term. Countries surrounding China have the potential to benefit economically from these production and supply chain moves, especially the ones with a strong manufacturing and tech footprint.

The mitigation and management of risk during disruptions like these on the tech market depend greatly on being able to spot the early changes in buying behavior. The following are important signs to pay attention to when it comes to navigating these turbulent times:

  • Are consumers avoiding or pushing off big value purchases?
  • Have competitors’ performance changed significantly?
  • What are the sectors that are hit the hardest by the drying supply chain?
  • What are the effects of postponing launches on key markets?
  • How has the split between online and offline shopping changed with most people being self-quarantined right now?
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