SARS Threatens the Electronics Industry
Online staff -- EDN, April 1, 2003
With corporate travel plans becoming disrupted worldwide, fear of severe acute respiratory syndrome (SARS) is threatening to have a significant negative impact on the global electronics industry.
Reuters is reporting the SARS outbreak has already claimed at least 63 lives, and has affected almost 1,900 people in a dozen countries. The virus is thought to have originated in Guangdong Province in the People’s Republic of China, adjacent to Hong Kong.
According to IT researcher the Aberdeen Group, Motorola Inc. has temporarily closed a cell phone manufacturing facility in Singapore after authorities quarantined 305 workers due to SARS exposure; Craig Barrett, CEO of Intel Corp., may skip this month’s Intel Developers Forum; and K.Y.Ho, CEO of ATI Technologies Inc., has postponed a trip to Asia planned to announce ATI's new line of graphics processors, which represents a setback in its competitive battle with Nvidia Corp. Various companies, such as Broadcom, Cirrus Logic, Conexant, and National Semiconductor maintain teams of applications engineers in the affected regions, Aberdeen said.
Dan Mahoney, COO with Tokyo-based Renesas Technology Corp. -- the company resulting from the combination of Hitachi and Mitsubishi’s semiconductor businesses -- said SARS represents a greater potential impact on the supply chain than the current military conflict in Iraq.
At this week’s APEX trade show in Anaheim, Calif., many attendees commented on a noticeably smaller number of attendees from Asia, speculating that travel restrictions due to SARS and Iraq were to blame.
Should the SARS virus continue to spread or ignite further fears, manufacturing disruptions, travel bans, and transportation delays related to SARS jeopardize the availability of semiconductors, electronic components, low-level assemblies, and system product sourced in the PRC and nearby countries, the Aberdeen Group said.
“For the past 18 months, digital consumer technologies such as wireless home networking gear have sold strongly and continue to be a bright spot. Unfortunately, most of this technology is produced in the Asia-Pacific region, and particularly the PRC,” said Russ Craig, a digital consumer technology analyst at Aberdeen, in a statement.
“While global consumer demand is surging, the ability of suppliers in this region to provide the goods and services that support high levels of growth simply might not be there,” Craig added. “As an example, the PRC is a major source of AC-to-DC power supplies -- those little black cubes that clutter your power strip. You can assemble a laptop elsewhere, but you cannot sell it without a power supply. Thus SARS threatens the supply of key component building blocks, not just the assembly plants.”
Schedule slippages and disruptions in growth plans for global electronics companies would cause problems for the electronics industry. A worst case scenario includes major supply chain disruptions and a potential “nuclear winter” for the semiconductor and electronics industry, Aberdeen said.
