Recently, the new type of coronavirus 2019 (2019-nCov) spread rapidly in China, and the World Health Organization (WHO) Emergency Committee held a meeting on January 30 to announce that the new coronavirus epidemic constituted a public health emergency of international concern (PHEIC). According to the characteristics of this new crown virus, compared with the timeline of the SARS epidemic development in 2003, the chief opinion of China Merchants Bank Research Institute believes that in the baseline case, considering the difficulty of prevention and control brought about by the peak of the Chinese Spring Festival return journey, the epidemic may be obtained in March Effective control has an impact on the economy in the first quarter.
Mobile phone industry chain: both sides of supply and demand are impacted
Demand side: mobile phones have certain optional consumption attributes. In the current situation where offline channel sales still dominate, the panic caused by the epidemic and the frequency of going out are reduced, which restrains some consumers' demand for replacement. The economic downturn caused by the epidemic will lead to a decline in income and even unemployment for some consumers, and a decline in spending power, which in turn affects mobile phone consumption. We expect domestic mobile phone shipments to decline by 20-30% in 2020Q1. Taking into account the impact of the epidemic, we lowered our previous forecast and expect that domestic smartphone shipments in 2020 will fall from a year-on-year increase of about 1% to a year-on-year decline of 5%.
Supply side: Hubei ’s local mobile phone assembly capacity is small, but Henan, Jiangxi, Hunan and other provinces around Hubei have the main production bases of mobile phone industry chain companies such as Foxconn, Ophir, and Lansi. Guangdong and Zhejiang are also major bases for the mobile phone industry chain. At the same time, the degree of automation of mobile phone industry chain companies is generally not high, and the number of workers is large. From the current epidemic situation, the resumption of work in many localities has been affected, and it may have a significant impact on the global mobile phone industry chain. After the new crown virus was declared a global emergency by the WHO, it will follow up whether it will have an adverse impact on exports.
At present, the transportation capacity of many places in China is greatly affected, the transportation time of some raw materials is prolonged, and the disturbance factors that cause the supply of raw materials are worthy of attention.
The epidemic situation may also affect the pace of release and listing of 5G mobile phones of major brands. Xiaomi Group announced on the 4th that the Xiaomi Mi 10 mobile phone was changed from offline to online release. Attention should be paid to the release of major brand products at the Global Mobile Communications Conference (MWC) at the end of February.
The printed circuit board (PCB) industry: a major impact on the industry's supply side
In recent years, the number of PCB manufacturing enterprises in Hubei Province has grown rapidly. Hubei is the production base of PCB factories in Taiwan. Taiwan Optoelectronics, Xinxing, Jianding, Nanzi Electric, and Dingying all set up factories in Hubei. Among them, the total scale of PCB industry capacity in Huangshi City, Hubei Province has exceeded 20 million square meters per year, becoming the third largest PCB industry cluster in China after the Pearl River Delta and Yangtze River Delta. Based on public information, we estimate that the PCB output value in Hubei accounts for about 10-15% of the country. This epidemic is expected to have a large negative impact on PCB companies in Hubei and may cause some impact on the Chinese PCB industry. It is recommended to pay attention to the return of employees and the supply of raw materials for PCB companies in Hubei.
Semiconductor industry: Yangtze Memory Technologies Co., Ltd. (YMTC) production expansion affected, the industry as a whole has little impact
The new capacity ofYMTC in Hubei and Wuhan Xinxin are expected to be affected by the epidemic. According to previous survey feedback, the target production capacity of YMTC is expected to reach 50,000 pieces / month and 100,000 pieces / month in the first and second half of 2020, respectively. At present, the return of employees from Hubei and the removal of overseas Chinese from Wuhan in many countries may cause issues The company's capacity release was postponed. Given that YMTC currently accounts for a small percentage of global memory capacity, its impact on the semiconductor industry is limited.
China's two major chip manufacturers, SMIC and Hua Hong Semiconductor, have no presence in Hubei. As the country's leading integrated circuit manufacturing company, SMIC announced on the 3rd that the company and its supply chain are operating normally, production lines in various regions are continuing their production operations as planned, and no cases of infection have occurred in employees.
Overall, the impact of the epidemic on the semiconductor industry is limited. It is recommended to pay attention to the return of employees of semiconductor companies, the supply of raw materials, and equipment installation.
The panel industry: the overall impact of the industry is small
The production process of the panel industry is unique, and the production line needs to run continuously throughout the year. From the announcements of major companies in the panel industry, such as BOE, TCL Group, Shentianma, and Visionox, and our investigations, the outbreak has limited impact on the supply of panel capacity.
For Hubei, Hubei Province accounts for about 9% of global mobile phone panel production capacity, TV panel production accounts for about 2%, which is not high, and the production lines continue to operate during the Spring Festival holiday. Enterprises (Wuhan BOE, Wuhan Huaxing Optoelectronics and Wuhan Tianma) have limited capacity supply impacts.
Delays in rework of personnel and poor supply of raw materials are the focus of attention. The specific impacts include:
1) At present, the epidemic situation has affected employees' return to work. In particular, the return of employees from the Wuhan production base of the panel company and the subsequent recruitment of employees have certain pressure.
2) The raw material inventory of major panel companies can meet the current production needs, but it should be noted that the supply of some production materials may have a short-term lag due to factors such as delayed resumption of work by suppliers and poor logistics.
3) Withdrawal of overseas Chinese from the United States and Japan, delays in equipment installation may hinder the climb of Wuhan BOE's new production line.
In view of the large impact of the new crown pneumonia virus incident, we recommend that the relevant departments continue to pay attention to the production and operation of the electronics industry, the availability of employees, the installation of equipment, the operation of the industrial chain and the export, and take effective measures in a timely manner. It is recommended to moderately increase the support for high-quality enterprises that have been impacted in the short term but have better industry prospects.
——Source: EET.com
