China's coronavirus outbreak is set to have far-reaching impacts on the global IT industry and could undermine global demand to a great extent if related supply chains are cut off, according to Colley Hwang, president of Digitimes.

Taiwan's shipments of large-size panels in 9-inch and above sizes (excluding Sharp's) are expected to contract 7.8% sequentially in the first quarter of 2020 if the coronavirus outbreak is under control, according to Digitimes Research.

The coronavirus outbreak in China is hitting hard many in the supply, but TSMC is a major exception. The world's top pure-play foundry has no plans to revise its sales guidance for the first-quarter, and reportedly none of its major clients are cutting orders despite the epidemic, with the foundry's capacity supply remaining tight. While even TSMC's China fabs have been able to maintain smooth operation, others in the IT sector have difficulties returning to normal production though work at their China plants has resumed. Foxconn and Pegatron, like many other Taiwan-based makers running manufacturing plants in China, are seeing limited numbers of employees returning to work. Failure to resume full production at Foxconn and Pegatron will affect iPhone shipments to Apple.

Many factories in China resumed work today after an extended Lunar New Year break, but many Taiwanese IT firms expected a low return rate of workers amid the ongoing coronavirus outbreak, which is showing no signs of abating. Some components firms have even decided to delay further their work resumption to February 25. And it remains uncertain how badly Foxconn's production for Apple will be affeced by the epidemic. For MediaTek, global 5G handset sales will be lower than expected in 2020.

Global server shipments went up 13.4% sequentially in the fourth quarter of 2019 thanks to rising demand from US large datacenter companies and China's server market. However, shipments in the first quarter of 2020 are expected to be affected by China's coronavirus outbreak, according to Digitimes Research's latest server tracker.

For many parts of China, work is supposed to resume starting February 10 after an extended Lunar New Year break in the wake of the coronavirus outbreak, but manufacturers generally do not believe their production can return to normal levels. Materials and labor shortages will be a major problem due to local governments' tight control of transportation. The chairman of panel maker AUO says the display supply chain braces for major impacts if the epidemic cannot be contained soon. Taiwan-based passive components makers have aleady been asked by their clients to raise their production outside the epidemic-hit China.

iStaging has seen a surge in inquiries following China's coronavirus outbreak about its VR/AR solutions that can replace person-to-person contact conventionally entailed in general business operations, according to company COO Rene Fang.

The extent of the impact on the ecosystem by the coronavirus outbreak is anyone's guess at this stage, but industry and market observers generally agree that a prolonged epidemic will take a heavy toll on both the supply chain and consumer demand. The China smartphone market is very likely to see a sharp drop in shipments in first-quarter 2020, and in a more optimistic scenario, smartphone shipments to the China market will drop 9% if the outbreak can be contained by the end of February, according to some observers. This is bad news for everyone involved in the smartphone market, including vendors of mobile processors. MediaTek, who has a strong presnece in China's handset maket, may see a sequential decline of as much as 15% in revenues in the first quarter. But foundry house TSMC is not ready to revise its guidance for the first-quarter sales, which accroding to its forecast given last month, will decrease slightly compared to fourth-quarter 2019.

The coronavirus outbreak in China has widespread impacts on the ICT supply chain. Although many makers are supposed to resume production in China next week or in mid-February if no further complications occur, they cannot tell how normal their operations will be. Notebook ODMs estimate their utilization rates will be 50-70%, depending on the numbers of workers able or willing to return to work and material supply conditions. Companies in other sectors face the similar uncertianties and China-based panel makers, including BOE, CSOT and Tianma, who have fabs in Wuhan - the epicenter of the outbreak - could fare worse. For the mobile device market, the first year for the 5G era got off to a really bad start. Demand for 5G smartphones is likely to bt hit by the outbreak, which in turn will dampen sales of mobile DRAM.

Global notebook shipments were weaker-than-expected in the fourth quarter of 2019 due to Intel's ongoing CPU shortages and major brands stopping stocking extra inventory in the wake of easing US-China trade tensions. However, annual shipments in 2019 still grew 4.1% on year, according to Digitimes Research's notebook tracker.