Coronavirus challenges Chinese electronics manufacturing

As we moved into the new year, celebrating change and leaving 2019 behind, the World Health Organization (WHO) was alerted to several cases of pneumonia in Wuhan City, Hubei Province of China. This particular virus did not match any other known virus and – as always when dealing with something unknown – we do not know the impact it will have on our lives. Chinese authorities later confirmed that the virus – belonging to the group of coronaviruses that also include SARS and MERS or the common cold – was spreading rapidly. More than 6’000 cases are confirmed to-date, most of them in China. In an effort to contain the spread of the coronavirus, the Chinese government has extended the national Chinese New Year holiday for an extra three days. Those are the basics and – apart from general advise on travel and health – there are a number of areas that are not necessarily top priority. Electronics manufacturing being one of them. The effects on the electronics supply chain Evertiq has reached out to a number of companies that either have production in China or manufacturing partners in the country to see how they are dealing with the issues amid the outbreak. Austrian PCB manufacturer AT&S – who has operations in both Chongqing and Shanghai – says the company is observing the developments around the new coronavirus very closely and is keeping informed though the official channels. “Our plants in Chongqing are in operation – Chongqing is in operation since January 26th, Chongqing 2 started today, January 29th. In Shanghai – but this is a regional decision – the government has decided that companies are not allowed to start production again until February 10th – we expect the start of the production in Shanghai February 10th,” says Director Communications, Gerald Reischl, in an emailed statement to Evertiq. Mr. Reischl continues and says that the company expects all its plants to be in operation by February 10th, 2020. However, should the situation change, new discussions will be held. AT&S are in close contact with customers to pass on up-to-date information. Swedish PCB supplier, NCAB Group, says in an official statement that the situation will impact the group’s ability to ship products. This is due to the fact that the group’s approved factories as well as Customs Clearance and Freight Forwarders will not be operating for several days. “It is expected that this period of disruption may be experienced as we move further into February, therefore we are working closely with our supply chain partners to obtain a more accurate forecast with regards to order books,” the company writes in an update. Danish EMS provider GPV Group – which operates a manufacturing facility in Zhongshan, China – responded to Evertiq’s questions stating that: “the Corona outbreak and the extension of the Chinese New Year holiday will affect our supply chain as our employees – and our suppliers’ employees – cannot go to work until 10 February at the earliest.” “Our site in China is trying to plan the scheduled productions as carefully as possible with the goods already in stock and we are working closely with our supply chain partners to obtain forecast with regards to potential disruption of deliveries of goods,” the company commented in an emailed statement. None of the group’s other sites are currently affected and if suppliers in China resume operations on February 10th, 2020, GPV does not expect any delays. Swedish EMS provider Note informed Evertiq that the company is keeping its Chinese operations closed until February 10th, 2020. CEO, Johannes Lind-Widestam, tells Evertiq that a week’s halt could create minor problems, but if it develops further and the closure lasts a month, that’s when the real issues would emerge. German EMS giant, Zollner, has already published a statement on the impact of the virus, stating that its plant in Taicang – which is located 800 km from the city of Wuhan – will remain closed until at least February 8, 2020, in accordance with the specifications of the government. Until then, there will be no possibility to enter the plant. Operational activities can neither be started nor continued. Fortunately, none of the company’s more than 500 employees in Taicang has been affected by the virus so far and Zollner says it will do everything possible to ensure that this continues. “As a preventive measure in the interest of all Zollner employees worldwide, the board of Zollner Elektronik AG, in close coordination with the management in China, has decided to stop all business trips to and from China for the next two months,” the company writes in the statement. EMS provider Enics says that it is following the Chinese Government and local government orders on extensions of the ongoing Chinese New Year bank holidays. ”We are working closely and constantly with our supplier chain to figure possible effects of the Chinese Government measures on the supply chain and deliveries of supplies to us,” the company writes in a statement. Besides suppliers, Enics says it is also working closely with logistics partners to arrange deliveries to customers as soon as the situation will allow for it.

---

Evertiq will continue to cover the development of the situation.