[Analysis] Impact of New Crown Pneumonia on Electronic Information Industry
China Electronics and Information Industry Federation
Since December 2019, the new type of coronavirus pneumonia (referred to as "new coronary pneumonia") has spread rapidly in China, and as of February 10, more than 40,000 people have been diagnosed. With the end of the New Year holiday, the impact of New Crown Pneumonia on all walks of life has gradually emerged. As far as the electronic information industry is concerned, in the short term, the epidemic will have a negative impact on the operation of the industry; in the long term, short-term disturbances will not affect the long-term positive trend.
I. Impact of epidemic situation on Wuhan's electronic information industry
As the area most affected by the epidemic, Wuhan has seen a sudden rise in strategic emerging industries represented by the communications and electronics industries in recent years. In the first three quarters of 2019, investment in the “core screen end network” projects increased by 40.3 %. Under the influence of the new crown pneumonia epidemic, the company's damage is also more prominent.
(1) Printed circuit board (PCB) industry. In recent years, there have been 21 PCB manufacturing enterprises in Hubei Province, with an annual output of approximately 3% of the country. The enterprises are distributed in Wuhan and 4 surrounding cities, among which there are a maximum of 9 Huangshi enterprises. Hudian, Xinxing, Jianding, and Dingying are among the top 100 global companies. Their products are mainly HDI, high-layer boards, and IC substrates. The rapid development of the industry in these years has made Hubei the successor to the Pearl River Delta and Yangtze River Delta. The third largest PCB industry cluster in China.
The outbreak of this epidemic has put pressure on PCB companies in Hubei as a whole, and employees of electronic circuit companies in Hubei and even across the country will return to work, resume recruitment, order delivery, capital chains, and supply chains.
(2) Semiconductor industry. Yangtze River storage expansion is affected. The new capacity of Yangtze River Storage and Wuhan Xinxin are expected to be affected by the epidemic. It is reported that in the first and second half of 2020, the target capacity of Yangtze River Storage is expected to reach 50,000 pieces / month and 100,000 pieces / month respectively. Due to the impact of the post and the withdrawal of overseas Chinese from Wuhan by many countries, the planned target capacity release may be delayed.
(3) Panel industry. With the successive production of TCL Huaxing and Tianma production lines in Wuhan, the output scale of Wuhan's small and medium-sized display panels has reached the first in the country, becoming the country's largest new-type display industry base. However, with the closure of Wuhan, it will be more difficult for personnel to resume work, and the entry and exit of materials will be blocked, which will affect the panel and even the entire mobile phone industry chain. IHS Markit predicts that China ’s domestic panel plant production rate will fall by 10-15% in February.
It is reported that BOE has a 10.5 generation TFT-LCD production line in Wuhan, which mainly produces 65- and 75-inch high-resolution liquid crystal display panels. The downstream is mainly TV manufacturers, but the current production line has not yet mass-produced, so its impact on the downstream is limited. Corning's glass substrate project will be put into production in 2019. Corning already has three factories in Beijing, Chongqing and Hefei in China, so its downstream impact should be limited to Hubei's internal panel factory. TCL Huaxing has T3 and T4 projects in Wuhan, and Tianma also has two large production lines in Wuhan. At present, the Huaxing Wuhan plant is operating normally, and the staff on duty are required not to contact the outside world.
At the same time, it also affects the field of optoelectronics. Wuhan's optical fiber and cable production scale ranks first in the world, accounting for 2/3 of the domestic market and 1/4 of the international market; the domestic market share of optoelectronic devices and optical transmission equipment is 60%, 10 %.
Second, the current difficulties in the industry
Affected by the new crown pneumonia epidemic throughout the industry, enterprise project delivery will be delayed or even stagnated, thereby affecting the overall economic efficiency of the enterprise. According to preliminary calculations, affected by the multiple impacts of epidemic prevention and control, resumption of labor, market expansion progress, and government support, according to the 2003 SARS experience, it is estimated that there will be an adverse impact on the overall economic efficiency of the industry in three months, and the industry's asset-liability ratio And the two gold occupation indicators have a risk of exceeding standards.
(1) Costs increased and operating indicators were affected. The company's original fixed investment in research and development, rent and other fixed expenses are still continuing, and affected by the epidemic, factors such as enterprise logistics, production, inventory, and imports have led to rising raw material prices. Coupled with the short-term decline in the electronic product market, companies are facing tremendous operating pressure. Large and medium-sized enterprise customers had originally postponed the relevant bidding plans, industrial customers delayed construction, and the market declined; small and medium-sized manufacturing enterprise customers faced tremendous pressure on costs and cash flow. For this reason, it is expected that the overall economic benefits of some enterprises will decline by 25% -30%.
(2) The resumption of work of manufacturing enterprises is affected. Affected by the new crown pneumonia epidemic, there are widespread problems such as labor shortages, and employees are unable or unwilling to return to work. Enterprise production plans have been postponed, coupled with a 14-day quarantine period, and normal production is estimated to be completed by the end of February.
(3) Problems in epidemic prevention. First, the future situation of the epidemic situation is unclear. The employees of large group companies are distributed throughout the country, and some of them are in the epidemic area of Wuhan. The new type of coronary pneumonia virus has no obvious symptoms during the incubation period but is still spreading. Unknown conditions may affect the production of the enterprise. Second, the spread of the epidemic and the duration of the impact after the epidemic cannot be accurately judged. After the concentration of workers resumes work, they are worried that if the epidemic continues, the lack of epidemic prevention materials will become a certain hidden danger.
(4) The order or project delivery is generally delayed. Affected by the epidemic, the delivery of business orders or projects will have a greater impact. Some companies are worried that many overseas orders, in particular, will have to be delivered on time. Failure to deliver on time will affect subsequent orders. The project construction unit stated that there was a delay in project delivery. Software companies have also stated that it is more difficult to deliver on the stock business, resident services and development are more difficult; due to the need for isolation, system integration project supply, installation, commissioning and other tasks will be delayed to varying degrees, affecting delivery.
(5) Insufficient supply of raw materials and materials. In addition to urgently needed supplies for epidemic prevention and control such as medical equipment, affected by the epidemic, some companies' raw and auxiliary materials suppliers for production are also suspended and temporarily difficult to supply. In addition, national transportation logistics is restricted, and cross-region transportation logistics is in a semi-paralyzed state. Scheduling and loading and unloading of shipping vessels are also affected, and the disturbance factors in the supply of raw materials deserve attention.
(6) Uncertainty in new business. There is greater uncertainty in the potential for new business development of enterprises. Judging by the SARS epidemic in 2003, the business growth rate of enterprises has all slowed down. Based on previous experience, it can be predicted that due to the outbreak of the epidemic, the new market demand may decrease, and the difficulty of developing pre-sales work will also increase, which will create greater uncertainty for the company's new business development. .
In general, affected by the new crown pneumonia epidemic, except for the adverse growth in medical equipment, remote services and remote monitoring, remote education, virtual reality, most manufacturing industries have reduced production. In view of the low domestic gross profit of the domestic manufacturing industry, low brand premium capability, and high rents and labor costs, it will further exacerbate the direct measures of "reducing people" and reduce the budget for digital transformation and transformation. At the same time, local governments will increase their budgets for prevention and control, and will implement measures such as tax reductions or discounts to reduce the pressure on companies to survive, resulting in lower government procurement budgets that promote consumption. In the short term, the electronic information industry will be further affected. It is expected that the growth of the electronic information industry in the first quarter will be affected, and enterprises will face risks such as unavailability of timely delivery of materials, insufficient staff, shortage of spare parts supply, and even reduced orders.
3. Judgment on the development of the industry after the epidemic
(1) Manufacturing, especially cities with a high proportion of electronic information, may recover faster. The manufacturing industry has made a significant contribution to the steady economic growth. During the SARS epidemic, cities with a high proportion of manufacturing industries tend to recover faster and more efficiently after the epidemic, and it is expected that the manufacturing industry will also play an important role in the steady growth during this epidemic. Role.
(2) Consumer electronics squeeze demand is expected to be released after the epidemic. Affected by the epidemic, in the first quarter, the willingness to consume electronic consumer goods such as smartphones, tablets, and wearables will decline, and shrinking downstream demand will affect the stocking of the upstream electronic supply chain; but in the medium term, squeezed demand is expected to occur after the epidemic Release, demand will only stagnate and will not disappear.
(3) The epidemic situation may bring new opportunities to the semiconductor industry. The outbreak of this epidemic will bring changes to people's production and lifestyle, and the new application fields that will emerge from this will become a new driving force for the development of the semiconductor industry. From this perspective, the epidemic has also brought new opportunities to the semiconductor industry. Development opportunities will trigger more market demand, and will accelerate the pace of localization of the integrated circuit industry.
4. China's industrial Internet will accelerate. This time, the fight against "new crown pneumonia", electronic information technology shines, becoming a "new weapon" to overcome the disease. It can be predicted that field-tested artificial intelligence AI, blockchain, cloud computing, big data, edge computing, Internet of Things and other technologies will accelerate application implementation in the main battlefield of economic and social development. The Internet is accelerating from information technology to digital technology and from the traditional Internet to the smart Internet.
(V) Online education is more important or growing. The Education Commissions across the country have successively announced announcements of delayed start of school, and it is strictly forbidden for any off-campus training institution to conduct any form of offline training activities. Affected by the epidemic, after a certain period of user habits cultivation, online education will be recognized by more people.
(6) Remote office may accelerate. With the gradual recognition of smart conferences by users, the penetration rate of the smart conference market in our country has continued to increase, and the market size has grown rapidly; under the continued influence of the epidemic, it will further promote remote office habits.
(7) Demand for white electricity may increase after the epidemic. First, under the influence of the "pneumonia epidemic", consumers' health awareness will be further enhanced, attention to fresh air will be further enhanced, and demand for fresh air products such as air purifiers will increase; second, under the effect of the epidemic, residents Awareness of health protection will rapidly increase. Drum washing machines with high-temperature washing programs and pulsator washing machines with heated washing will become hot products in the market. Third, the inconvenience of road traffic caused by the spread of the epidemic strongly stimulates the consumer's "stock-housing" nerve. The demand for large-capacity refrigerators will increase.