Coronavirus impacts Brazilian technology manufacturers

The Covid-19 outbreak is impacting the supply chains of Brazilian smartphone and computer manufacturers, who can’t get hold of components from China that are needed to assemble products, according to a recent survey.

The member survey carried out by the Brazilian Association of the Electrical and Electronics Industry (Abinee) on the impact of the novel coronavirus spread on the production of the electro-electronic sector was released on February 21. The survey, which covers about 50 manufacturers across the sector suggests that 57% of interviewees are having issues around receiving materials and components from China, up 5% on the previous survey, carried out on February 7.

The results indicate the situation of industries that rely on external components is getting worse, according to Abinee’s president, Humberto Barbato, who predicted the sector will see several stoppages going forward. Some 4% of the firm polled in the last survey were operating with partial shutdowns due to lack of components, while 15% were planning to do so in due course.

According to Barbato, however, there is no risk of a lack of finished products in the Brazilian market. “The issue is not more serious because we have local production of these items”, he points out.

Of the companies polled by Abinee, 50% said they should meet the expectations in relation to production levels expected for the first quarter of 2020, while 33% stated that it is not yet possible to predict what might happen. Some 17% of respondents have a negative outlook and expect they will not be able to fulfill expectations, with average production levels predicted to be 22% below what was initially projected.

According to Abinee’s president, the current difficulties are a “warning sign” for the local electronics sector as well as the entire Brazilian manufacturing industry, which is heavily reliant on materials and components from China.

“The situation exposes our high level of vulnerability in relation to imported components”, he observes, adding that the current situation also presents an opportunity for considering the local production of components used by the Brazilian manufacturing sector.

According to the association, 42% of electrical and electronic components used by Brazilian manufacturers last year came from Chinese companies. Other Asian countries were responsible for 38% of imports of such items in 2019, meaning 80% of components used by the sector came from Asia.

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