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Coronavirus starts to take its toll on the tech industry

Tesla, Qualcomm, Hon Hai directly affected by the virus outbreak, with disruptions threatening tech manufacturing and sales

china

The spread of coronavirus is affecting technology companies including Tesla, Qualcomm, and Hon Hai - whicn makes iPhones for Apple, as well as products for HP Inc. and Sony.

Tesla's stock fell by 17% on Wednesday, following VP Tao Lin's announcement, via Weibo, that the coronavirus outbreak in China would delay deliveries of its Model 3 cars.

The Model 3 vehicles are produced in Tesla's Shanghai Gigafactory, which last month was ordered by the Chinese government to shut down due to fears of the virus spreading within it. At the time, Tesla finance chief Zach Kirkhorn said that the closure would “slightly” impact the company’s profitability in the first quarter of the year.

Factories are scheduled to reopen on 9 February, yet with the death toll reaching 563, it is uncertain whether the Chinese government will or will not extend the shutdown.

The phone industry may also be negatively affected by the virus outbreak in China.

Qualcomm's chief financial officer Akash Palkhiwala stated on Wednesday that the government-imposed shutdown caused by the coronavirus might threaten manufacturing and sales.

During a conference call with investors, Palkhiwala said that Qualcomm expects "significant uncertainty around the impact from the coronavirus on handset demand and supply chain".

Hon Hai had more precise estimates about the coronavirus' impact on its business. The outbreak forced the company to revise its expected sales growth to 1-3%, rather than a previously projected 3-5%.

So far, the effects of the virus outbreak on tech companies were largely due to China being brought to a standstill by mandatory ‘self-quarantines’. Companies have not reported any cases of coronavirus among their workers.

However, LG has decided to prioritise its employees’ wellbeing by withdrawing from this month’s upcoming Mobile World Congress (MWC), in order to protect its staff from the virus outbreak.

MWC is scheduled to go ahead, yet organisers are likely to introduce a ‘no handshake’ policy to contain the possibility of the virus spreading among attendees.

As such, the coronavirus is having a direct impact on the technology industry form the manufacturing side through to technology showcases nations apart from China. 

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