Coronavirus expected to cause 5-week shipment delays
Electronics manufacturing industry to struggle with ripple effects for the rest of the year
Production / Materials
Electronics manufacturers anticipate at least a five-week product shipment delay from suppliers due to the coronavirus epidemic, according to a survey conducted by IPC, a global electronics manufacturing association. The group says shipping delays from China and other countries where the virus has spread are already having negative impacts on manufacturers.
Roughly 65 percent of manufacturers report their suppliers expect, on average, a three-week delay. However, electronics manufacturers expect delays to be longer than what their suppliers are currently quoting. On average, executives expect shipment delays to be at least five weeks.
The more it spreads, the worse it gets
“The delays will likely have ripple effects for the rest of the year,” said John Mitchell, IPC’s president and chief executive officer. “The longer China is affected by the epidemic, and the more it spreads to other parts of the world, the supply chain will experience more and varied strains and disruptions.”
An overwhelming majority (84 percent) of electronics manufacturers and suppliers are worried about the epidemic’s impact on their business operations. Delays in receiving supplier inputs can lead to factory downtime, higher average costs, transportation bottlenecks, pressure for alternative sourcing, delayed sales, and delayed prototyping that slows the introduction of new products. “In most cases, it’s not easy for manufacturers to switch suppliers, if that’s what turns out to be necessary,” added Mitchell. “Securing alternate sources requires an investment of significant time and money that must be weighed against the value gained.”
Surveyed industry pros at electronics manufacturing firms
IPC surveyed industry professionals at electronics manufacturing companies, including original equipment manufacturers (OEMs), electronics manufacturing services (EMS) companies, and printed circuit board (PCB) fabricators. Almost half of the survey respondents represent the contract electronics manufacturing services (EMS) industry. This segment performs an estimated 25 percent of North American electronics manufacturing for original equipment manufacturers (OEMs). The survey was conducted between February 11–16, 2020.
IPC will continue to perform regular surveys and research on this issue.