The spread of Severe Acute Respiratory Syndrome in Asia is causing cracks to appear in the supply chain that underpins the global electronics industry, according to a new report from Aberdeen Group, a leading market analysis and positioning services firm.

Aberdeen says that the market is not yet grappling with large-scale shutdowns affecting Asian countries and manufacturing facilities, as was first feared when SARS surfaced. However, a series of smaller impacts -including cancelled passenger flights used to haul freight as well as travel bans keeping key industry personnel out of the region - could add up to major problems for global electronics firms building products in or relying on components from China, Taiwan, Korea and elsewhere in the region.

Most high-value electronics products move by airfreight. According to Aberdeen's report, “SARS Impact on the Global Electronics Industry Revisited,” transpacific and European freight flights are running on schedule. However, 50% of the electronics trade in Asia/Pacific is intra-region, with airfreight shipments carried on wide-body passenger liners – the ones whose schedules are being drastically cut back due to SARS.

"Taiwan and Korea – key markets for semiconductor manufacturing – are regarded as being particularly vulnerable, as 50 percent of cargo capacity is carried in passenger flights," according to Aberdeen's Russ Craig, who co- authored the report with Peter Kastner. "Because those passenger flights function as feeders to the hubs for long-haul freight flights, if passenger flight levels continue to fall, major high-tech airfreight disruptions are likely to occur."

Aberdeen led the industry in late March by identifying potential threats to the global electronics industry in its report, SARS Virus Attacks the Electronics Industry. Key findings of Aberdeen's latest report on the ongoing impact of SARS on the global electronics industry include:

  • Projects in the Asia/Pacific region that require the presence of non- resident personnel such as sales, product applications engineers, or semiconductor capital equipment specialists, are certain to slip; failures requiring resources to fix will go unrepaired until SARS is brought under control;
  • Key contracts, new product development and new manufacturing facilities due to come online in China and elsewhere in the region are likely to be delayed;
  • Negative economic impact on the industry is unlikely to occur until late in the second quarter or beyond. Barring a complete shutdown of supply chain logistics, economic consequences will be company-specific due to the complexity of the industry value chain;
  • Semiconductor capital equipment suppliers are especially vulnerable due to SARS-related supply chain problems as most current equipment sales are into the region.

SARS Impact on the Global Electronics Industry Revisited is available for free by visiting www.aberdeen.com.

Register or login for access to this item and much more

All Information Management content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access