IPC: Coronavirus could cause 5-week shipment delays for EMS industry

March 4, 2020
IPC's survey indicates that an overwhelming majority (84 percent) of electronics manufacturers and suppliers are worried about the epidemic’s impact on their business operations.

Electronics manufacturers anticipate at least a five-week product shipment delay from suppliers due to the COVID-19 coronavirus epidemic, according to a survey conducted by IPC, a global electronics manufacturing industry association. In a Feb. 25 statement, IPC said shipping delays from China and other countries where the virus has spread are already having negative impacts on manufacturers.

According to the industry association, 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 delays will likely have ripple effects for the rest of the year,” said John Mitchell, IPC’s president and CEO. "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.”

IPC's survey indicates that 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 IPC's Mitchell. “Securing alternate sources requires an investment of significant time and money that must be weighed against the value gained.”

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 OEMs. The survey was conducted between February 11–16, 2020.

IPC said it will continue to perform regular surveys and research on this issue. Learn more at www.IPC.org.

Manufacturing companies are bracing for the impact of the coronavirus, as the Empire State Manufacturing Index rose 8.1 points to 12.9 in February, according to New York Fed data. Thomas CEO & President Tony Uphoff recently joined Yahoo Finance’s Zack Guzman, Sibile Marcellus and Marcum LLP Chairman & CEO Jeff Weiner on Yahoo Finance PM to discuss.

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