Coronavirus: Juniper Research forecasts $42 billion revenue gap for smart device vendors
Analysis conducted by Juniper Research indicates that Covid-19 could bring about a $42 billion revenue gap for smart device vendors over the next nine months, as a result of disruption to the supply chain.
Juniper Research, a Hampshire-based firm which provides research and analytical services to the global hi-tech communications sector, presented its analysis in a whitepaper titled Coronavirus: The Impact on Consumer Device Supply Chains.
The research considered numerous key devices including smartphones, tablets, smart speakers and wearable items such as smart watches.
The analysis forecasts the outcomes of low, medium and high impact scenarios.
Should the outbreak of coronavirus yield a high impact scenario, the research forecasts a production shortfall of around 80 million mobile devices over the next nine months.
Disruption mainly stems from delays to the delivery of vital components, meaning well-known providers such as Apple, Amazon and Samsung must fill the gaps in their supply chains in order to meet demand.
It is predicted that most of the shortfall will be made up by smartphone devices over the nine-month period, accounting for more than 85 per cent of missed shipments. The development of future devices is also likely to be delayed as a result of the pandemic.
However, further to this, the demand for new mobile devices is likely to fall thanks to the onset of financial uncertainty, which is likely to make consumers more reluctant to purchase new devices. This could leave vendors facing a significant challenge to recover the revenue shortfall from lost sales.
In terms of action to be taken, vendors can view the forecasts as a prompt to diversify their component supplier bases. Doing so is one means of potentially ensuring that future gaps in the supply chain can be filled.
Vendor supply chains have also been hindered by what the whitepaper calls “just-in-time manufacturing”, meaning that the supply chains are subject to timed deliveries of components immediately prior to the device manufacturing stage.
Juniper Research recommends that vendors consider building inventories of "strategic" components, essentially those of high importance, to help mitigate future disruption.