The APac electronics industry continues to flourish despite the SARS outbreak, according to Gartner, a research and analysis firm. To date the disease has not impacted the semiconductor and electronics industries with most saying it's business as usual. 

Gartner says the slowdown caused by the war in Iraq has probably had a greater impact on the industry than SARS, with companies like Acer experiencing a sharp decline in orders of between 10 and 20% from Eastern Middle East and the US since hostilities began. 

"The one possible disruption to the industry could be from mass infections on the vendor side, which has not been seen yet," said Dorothy Lai, Gartner's principal semiconductor analyst in Hong Kong. "Because this outbreak mostly affects people's personal interaction, electronics trade shows or company meetings will be deferred, potentially hurting some local buyers and sellers in the short term. Semiconductor shipments have not been delayed because of the disease so the long-term impact to the industry will probably be minimal."

A Gartner survey of 20 major semiconductor companies in Hong Kong and China shows that most of the vendors have not seen any major negative effect to their businesses here yet. However, about 40 % of the respondents think that SARS will hurt their businesses starting in the second quarter. Some forecast that SARS might hurt them by as much as 15 to 20%. 

"Some are also concerned that the slowdown in vendor and client communication will hurt their business in both the mid and long term," said Lai. "As retail businesses are getting hit, domestic consumer PC and mobile phone demand may also slow down in Hong Kong and China."

According to Lai about 90% of the respondents located in Hong Kong plan to lower their sales forecast if the outbreak continues to last another few months. Four respondents in Hong Kong even think the slowdown caused by the SARS epidemic will have more of an impact on the industry than the war in Iraq.

In Taiwan electronics contract manufacturer (ECM) vendors have not lost any orders, which shows that SARS is well contained in Taiwan, which may have relieved customer concerns of a supply-chain halt.

"Until now, manufacturers appear to be more concerned and worried on the direct impact that the war in Iraq will have on the global supply chain than the SARS epidemic spread in Asia," said Jamie Wang, analyst at Gartner Taiwan.

"This outbreak probably will not completely go away within the next few months," said Lai. "Therefore, vendors should continue with their business as usual. Orders will need to be pushed. If face-to-face interactions are not allowed, vendors and customers must communicate more through other means such as teleconferencing or videoconferencing." 

Lai warned that during this unstable time, original equipment manufacturers (OEMs) may purchase more than needed and keep excess inventories. 

DQ CHANNELS INDIA

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