Outbreak hits computer supply as factories cease operations

The coronavirus outbreak is hampering computer supply in Thailand, with giant computer makers Acer and Lenovo saying the temporary closure of factories in China has caused inventory to drop by up to 30% in the first quarter.

IT research firm IDC predicts PC sales in Thailand this year to remain flat at best because of the short supply and lacklustre business investment.

The virus has hit the global computer market supply chain because the majority of computer production is in China, said Alan Chiang, managing director for Thailand and Indochina at Acer Computer.

“These factories temporarily closed their operations,” Mr Chiang said.

In the first quarter, Acer’s product supply fell by 20-30% from the normal situation, he said, and if the factories cannot resume their operations, this will hinder the supply in the second quarter.

Acer, the fifth-largest PC vendor in the world, also has manufacturing plants in other countries, including India and the Philippines, and those factories may have to increase output to fill the void.

Mr Chiang said Acer has postponed new product launches, earlier planned for March, to the second quarter because of short supply and a lack of consumer sentiment.

“It is hard to forecast overall PC growth this year, as we are still in the period of uncertainty,” he said.

Takon Niyomthai, consumer lead at Lenovo Thailand, the local operating unit of the world’s biggest computer maker, said the prolonged closure of Chinese factories after the Lunar New Year caused the delay of shipments by 2-3 weeks in the first quarter.

Customers have been notified of the delay, Mr Takon said.

Lenovo saw a 20-30% drop in supply in the first quarter, he said, but there was no shortfall of inventory in the domestic market.

In some countries where 5G-enabled devices are planned for launch, such products could be affected by the lack of supply. And some computer components, including SSD storage and RAM, are becoming more expensive.

“We expect the overall PC market in Thailand to see flat growth at best this year on shrinking demand due to the stagnant economy, as well as the supply impact in the first quarter,” Mr Takon said.

Peerapat Samarnmit, an analyst at IDC Thailand, said the overall PC market in Thailand will be flat this year and could even contract, pressured by the virus outbreak, listless investment sentiment and the delay in government budget spending.

Weeradej Panichwisai, senior research manager of IDC Thailand, said the firm revised down its PC projection this year as a result of the virus outbreak hampering the PC supply chain.

“We estimate that in the first quarter PC sales in Thailand will drop 10% from the same period last year,” Mr Weeradej said.