Coronavirus: Pros and Cons for IT

The Chinese coronavirus 2019-nCoV could be an incentive to develop the UAV market and slow down the construction of 5G in China. The epidemic has also affected other segments of the IT industry and retail.

The spread of coronavirus in Hubei and other regions of China has become a problem for local doctors and a tragedy for many families. More than 560 deaths, over 28 thousand facts of infection in 24 countries (including 2 cases in Russia), unprecedented security measures in 12 millionth Wuhan and nine other cities, delays in the delivery of products and the closure of outlets – not all, what local authorities faced. At the same time, the epidemic also affected the IT sphere.

We have already written about the inconvenience that users of mobile devices have encountered due to the need to wear masks. Smartphone owners cannot use Face ID technology, and recognition systems see too many masks and too few faces. As the epidemic spread, it became obvious that due to the coronavirus, the delivery dates of smartphones and other electronics, including to other countries, could change. Problems were reported by Huawei, Xiaomi, Vivo, Realme, ZTE and Lenovo, as well as the American Apple. In the case of a transfer of supplies for a few more weeks, prices for mobile devices in the market could rise by 10-15 percent.

There are problems in China itself. Many factories and logistics hubs were closed by government decision until February 3. In Shanghai, business will be scaled down to February 9, and in Wuhan, enterprises will remain idle even longer. The Chinese New Year and related weekends partially solve the problem, when most of the facilities would still be idle. Electronics manufacturers took this factor into account in their trading operations, but longer-term problems in the production and logistics systems can lead to disruptions in the supply of products. For example, due to downtime in transport, many workers will not be able to return in time from relatives or from rest and begin to take up their duties in factories.

Failures in the operation of enterprises can also affect the construction of the fifth generation communication network in China. The country has long been promised leadership in the field of 5G deployment, but the coronavirus may disrupt these plans. The fact is that in Wuhan, the sites of many manufacturers of optical components are located, which are crucial for telecommunication networks. The area in which many of these companies are based is called the Valley of Optics. Key players in this segment include Yangzte Optical Fiber and Cable Co., Accelink Technologies Co. and FiberHome Telecommunication Technologies Co. According to analysts at Jefferies, the components they produce are so important that interruptions in their supply can lead to delays in the deployment of 5G networks.

However, there is no silver lining. Nasdaq analysts believe that the 2019-nCoV coronavirus could be the reason for more active development of the UAV market. The fact is that even the supply of food and medicine in an epidemic is turning into a problem. In addition to organizational difficulties, customers have concerns about the health status of couriers and drivers. Moreover, no one wants to get infected by buying things that are not essential.

To alleviate customer concerns, Alibaba and Meituan Dianping offer “contactless delivery,” in which couriers leave food in designated areas. Moreover, in an epidemic, staff costs are also rising. One solution to the problem could be drones. Alibaba service and its competitor JD.com have long been experimenting with deliveries from automated warehouses. In China, drone manufacturers from DJI and EHang can take advantage of this.

Currently, technical and regulatory barriers impede the development of the UAV market. Amid the spread of coronavirus, these barriers can be redefined, as happened with online shopping, which became especially popular after the SARS epidemic in 2003. Then the Chinese authorities removed the legislative barriers for this service, and the JD brand closed ordinary stores and went on the Internet. Another example of the impact of emergencies on technology can be the Line application, popular in Japan, which has gained an audience after the Fukushima accident in 2011. So the current situation can lead to the removal of barriers to the distribution of drones.