How Coronavirus Is Affecting the Technology Industry

March 13, 2020

By Fred Kosnac

Here are some things to expect in the coming months:

  1. Supply Chain Disruption - Manufacturing plant and office closures have limited productivity for the Q1. While many large companies rely on China for manufacturing, the technology industry has been hit especially hard with production delays of smartphones, laptops, smart speakers and more. If supply chains around the world continue to break down, all product supplies are going to be dramatically decreased. Once the coronavirus calms down, these supply chain issues will have a very negative impact on our economy, since approximately 70% of our GDP is consumer purchasing related.
  2. Technology Capabilities - Companies are going to be putting their remote workforce capabilities to the test. This leads to a greater stress on VPN networks and conference call systems. Companies that are unprepared for this will face the challenge of upgrading their technology in an effort to relieve some stress – at the same time as others who are in the same boat, which will create additional stress and delays.
  3. Securing Funding – Funding may be less available while the uncertainty persists. As the economic effect of the coronavirus on the U.S. and global economy is as yet unknown, investors may hesitate to take a risk on investing. Investors may also be holding some funding in reserve in case their existing investments require it during this tumultuous period.
  4. Cancellation/Postponing of Conferences and Trade Shows - Notable gatherings all around the world have implemented additional safety precautions, such as hosting the event virtually, while others have been called off or moved to a later date. Among the casualties was SXSW in Austin, one of the largest tech events of the year.
  5. Stock Market Challenges - Q1 earnings will inevitably be affected, leaving a great deal of uncertainty about just how much this will impact share prices. The challenge for investors in the short term will be to judge whether they expect stocks to bounce back, or whether this is the first stage of a bear market. Additionally, consumer sales will likely slump as more people decide venturing to stores is too risky.
  6. Business Disruption - Struggling businesses might see enough disruption to put them over the edge. Going concern and goodwill impairment triggers are possible as the financial impact from the coronavirus is evaluated.
About Fred Kosnac

Mr. Kosnac provides accounting, auditing and business consulting services to businesses in both the public and private sectors. He also contributes to EisnerAmper's technology and life sciences blog.