The recent emergence of a deadly virus in China, the Coronavirus, one of the world’s largest markets, has had an extensive negative effect on the tech space across the world.
China has a population of over 1.3 billion and a market GDP of over $13 million. According to the IMF, China contributes about 16.20% of the entire World’s GDP.
Following the outbreak of the coronavirus, several tech ventures have experienced fallout due to the fears of safety and possible backlash of the virus on the world’s second-largest economy. Here are some of the notable negative effects caused by the outbreak.
Tech stocks decline
Tech has been one of the strongest performers since the beginning of the year but earlier this week, following the continuous spread of the virus stocks of major tech companies declined.
Chinese e-commerce giants, Alibaba was the highest loser, declining by 4.1%. Other losers include Nvidia NVDA which declined by 4.3%, Micron (MU) 3.8 % and Tencent, one of the world’s biggest video and online gaming companies was also down by 4.0%.
Other notable declines include Elon’s Tesla (TSLA) 3.0%, Alphabet’s Google 2.5%, Apple (AAPL) 2.2%, Microsoft 1.9%, Amazon 1.6% and Facebook 1.2%.
The automotive industry is likely to face increased delays and difficulties as many of the cities in china reported to have the highest cases of coronavirus account for 40 per cent of China’s car market.
Worried about the health safety of their workers, many foreign carmakers like PSA and Renault have initiated plans to evacuate them out of the country. Car makers, Honda and Nissan, who are still building a plant with Wuhan-based Dongfeng, have also said they will evacuate most of their staff back home.
Wuhan, China, which is the hotbed for coronavirus outbreak, is China’s seventh biggest city and a major automotive hub: it is home to manufacturing and production sites for several international car makers including Honda and Groupe PSA, which owns the Peugeot and Citroen brands.
With the outbreak potentially preventing the opening of some car plants, consumers are likely to experience a delay in car purchases.
Apple’s Phone production
China is home to some of the major phone manufacturing companies in the world including Apple. Last year, Apple revealed plans to revamp the production of iPhone by about 10% in the first half of this year.
However, it seems that plan has hit a wall as the Nikkei Asian Review reported that the company which Apple has contracted to make up to 80 million phones have their manufacturing centre in China and would be affected by the continuous outbreak of the virus.
Also, Foxconn, a major contractor for Apple has disclosed it would delay the resumption of production in it ’s Zhengzhou manufacturing facility. The factory reportedly accounted for 15 per cent of global mobile phone output in 2018.
Several companies including Facebook have placed a ban on their staff to avoid travelling to China, as the death toll of the virus rises above 100. The ban means that business operations of the company will reduce as most operations will be done remotely until the ban is lifted.
Also, LG a popular home appliances company, and Chipmaker SK Hynix have both put a complete ban on travel to China and advised employees on business trips in the country to return home.
Although the Chinese government is trying to contain the outbreak, the confirmed cases of infection has risen to above 4,500. The virus might be biological but the consequences of its continuous spread is greatly affecting the global tech scene.
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