Taiwan-based notebook ODMs, which operate their plants mainly in China, have estimated their production utilization rates will range from 50% to 70% after resuming operation following the extended Lunar New Year break, as employees' return and supply of components and materials are being disrupted due to the coronavirus outbreak.
Manufacturers' production lines in China's Wuhan will not begin operation until at least February 14, while those in other parts of China will all start on February 10. Notebook ODMs' production lines are primarily in Suzhou and Chongqing, but they will not be able to know how many workers are returning and how much production can resume until the extended holidays end.
Since the outbreak has remained rampant in China, ODMs believe there is still a possibility for a further extension to the holidays. At the moment, most of their factories' management personnel have returned to their posts and will focus on delivering shipments for products already completed before the holidays.
Notebook shipments usually slip around 20-30% sequentially in the first quarter of a year and the coronavirus outbreak is expected to worsen the drop in the first quarter of 2020. But ODMs will not be able to provide a clearer picture about their shipments until after the factories begin operation.
Before the outbreak started, Compal Electronics and Quanta Computer both estimated double-digit percentage sequential drops in the first quarter of 2020, while Inventec expects a decline of 15-20% and Wistron 25%.
Since ODMs' factories in western parts of China, such as Chongqing and Chengdu, are mostly recruiting workers from nearby provinces, notebook production in the area is expected to see smaller impacts compared to those in coastal areas.
For ODMs with production lines in coastal area such as Compal, they are planning to have extra production hours to fulfill their orders.
At the moment, ODMs are mainly handling existing orders and will not begin development of new products until the outbreak is over. Most ODMs have considered the outbreak a short-term incident and therefore have not made any major changes to their production schedules.
Global notebook shipments, 3Q18-1Q20 (k units)
Note: The figures for 1Q20 do not take into consideration of the impact of the coronavirus outbreak in China
Source: Digitimes Research, February 2020
Article translated by Joseph Tsai
