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Electronics industry: Left to its own devices

How the electronics industry is managing its supply chain challenges in the US-China trade war and the pandemic;

As the US-China trade war continues to play out, the electronics industry struggles to navigate its way in the standoff, especially hitting sectors depending on both countries. Companies relying on China’s manufacturing powerhouse and huge market have had to recalibrate growth projections, while those counting on US imports are suddenly faced with higher prices.

When SARS-CoV-2 ground China’s factories to a halt and caused the COVID-19 pandemic, the disruption was total. So total as to put 5G’s supposed rollout year effectively on hold until before the end of the year. The ensuing supply issues and higher costs forced many planned network and product launches to be postponed.

Even after China restarted production in March, the level of economic uncertainty lingers, especially as overall spending has changed and diverted to essential goods, and taking a more conservative approach has become the norm for most businesses.

The pandemic exposed the vulnerabilities of markets, but this too has failed to blunt the efforts of the US and China to pursue each other’s agenda. Shortages and surpluses continue to escalate with no end in sight. And now, with the recent national security laws imposed on Hong Kong, a new wedge has been added between the contending parties, leaving the players in the electronics industry to find their own solutions. Apple, for instance, has adjusted its growth projections but signaled readiness to forge ahead.

“Supply chain reports suggest that their iOS operating system is two weeks behind schedule … and the devices are now more likely to arrive in October, potentially as late as the first week of November. While that’s a little late, it’s not without precedent,” said VentureBeat’s Jeremy Horwitz. Samsung launched the Galaxy S20 series in the early stages of the pandemic, while other Android vendors have heavily targeted China, where demand remains high.

Buyers sourcing accessories for the newest mainstream brands should therefore avoid jettisoning their prior plans, but rather adapt timelines and keep an eye on emerging news of manufacturers’ revised release dates in order to jump in on day one of a new release. Those in the devices and wearables business, meanwhile, may find a combination of reopened factories eager for business with slipping delivery dates from rival brands may provide gaps in the market to be exploited – a situation that requires both alertness to opportunity and caution about lukewarm consumer sentiment.

Extra Insights

To learn how companies are dealing with the pandemic and the trade war, check out:

Despite the pandemic, the trade war is still on

Where Should US Businesses Look to Diversify Their China Operations



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