Coronavirus will contribute to a nearly 30% plunge in Chinese production of digital signs for public displays in the first quarter, according to analyst firm Omdia.
That’s because digital sign production lines are heavily concentrated in Guangdong and Zhejiang provinces, the epicenter of the coronavirus impact, according to Omdia analyst Tay Kim. As such, those areas are impacted by a labor shortage which will “decimate” public display production in China, Omdia said.
Many analysts have predicted such production shortages could lead to higher prices for displays, although it isn’t clear how long the shortages will last because the virus is still sickening and killing more people each day.
As of early Thursday, health officials put the death toll at 2,126 with all but 11 of those deaths in mainland China. The total number of people infected globally has exceeded 75,000.
Omdia said Thursday that production of videowall products will be the worst-hit segment in the public display sector, with a drop in production of such products by 46%.
Also, televisions produced for signage applications will decline by nearly 11% while production of interactive flat panels will drop by 21% for the first quarter, compared to a year ago.
After the Chinese New Year, many factories reopened on Feb. 3, but most of their workers still have not returned to work as of Thursday, Kim said. The labor shortage is about 30 percent for all of February, “causing production levels to plummet throughout the first quarter,” Kim added.
Omdia defines public displays as flat-panel video displays used outside of homes in public settings for information, advertising and other messaging with full color and motion.
Omdia tallied the global market for public displays combined with signage TVs and consumer TVs at $14.9 billion in 2019.
Part of the reason for the production cuts is that LED and LCD display manufacturing rates are down. They are predominantly manufactured in China and producers face the same labor issues with coronavirus. More than 20 LED and LCD suppliers operate in affected regions of China, including TPV, Hikvision, Dahua, CVTE, Hitevision, Unilumin and Absen.
These LCD panel makers are also unable to obtain supplies of components, including basic things such as printed circuit boards, integrated circuits and LCD modules. There’s a slowdown in customs clearance for such components, which present “major logistical challenges for digital signage companies,” Kim said.
Disruptions to the display pipeline had been earlier anticipated by analysts at Omdia as well as DSSC and others.