Coronavirus Impacts 5G Buildout

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In the race for 5G, the growth of technology is facing a fallout as the spread of coronavirus threatens more than public health. Carriers, investors, and global supply chains are closely watching the epidemic and its likely threat to network deployment and the manufacturing of devices needed for consumers to use the technology.

According to analysts at Omdia, a global technology research firm, coronavirus is hitting the interconnected sectors of the electronics industry particularly hard.

 “With the epidemic arriving at the dawn of 5G’s mainstream deployment phase, the coronavirus has the potential to disrupt the progress of the next-generation wireless standard, as the crisis slows or threatens to slow the production of key smartphone components, including displays and semiconductors,” Omdia analysts wrote last week. 

“We believe that China will take a significant position in the 5G era in both supply and demand of devices and network-wise,” Omdia analyst Jusy Hong said in an email interview. “The coronavirus outbreak will slow down production of network equipment and devices. Also, the outbreak is depressing the local economy of China and this will freeze smartphone demand in the country.”

An example of the fallout played out earlier this month when Mobile World Congress canceled its annual Barcelona show. As one of the largest annual mobile-focused trade shows, the cancellation will lead to new product delays directly related to coronavirus. Market Watch reported that Intel Corp. needs to reschedule the launch of new chips for 5G networks that was originally planned on the eve of the show.

“The products which were supposed to be launched in a week’s time will be launched at a different date — OEMs will have to make plans on that,” said Gerrit Schneemann, senior analyst at Informa. “Even if they can announce phones quickly, a disrupted supply chain means that they might not be able to actually ship any phones right away.”

Warnings about the spread of coronavirus have spawned negative reports in current earnings announcements: Intel Corp. INTC reportedly at -4.01 percent, Verizon Communications Inc. VZ, -0.36 percent, AT&T Inc. T, -1.30 percent, and Xilinx Corp. XLNX (chips for 5G base stations) -2.90 percent.

Apple Inc. AAPL, -0.02 percent, which expected to launch its first 5G-enabled iPhones later this year, admitted that coronavirus is affecting its business, according to Market Watch. Meanwhile, rival Samsung Electronics Co. Ltd. reported earnings at -4.05 percent and expressed concerns over the supply chain needed to manufacture new phones. Samsung recently launched a new smartphone that is designed to run on both 5G spectrums in the U.S.

For now, as coronavirus reaches near pandemic status, all eyes are on the slowdowns of device manufacturing in China and the potential constraints on an already slower-than-expected spread of the new wireless-network protocol.

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