Increased remote work due to COVID-19 foreshadows stock market crash
Optical communications, 5G, smartphones, laptops, and TVs inevitably hit
Industry Needs Advancement of New Technologies and Adaptation to New Services


I returned to work after two weeks.

This is what an official from an IT company said when I met with him. As COVID-19, which originated in Wuhan, China, late last year, spread to Korea, many companies began implementing remote work. While this measure aims to prevent workplace infections and minimize work losses, it can sometimes make it difficult to reach quick decisions. On the 2nd, complaints from remote workers also surged following a KakaoTalk transmission error.

The economic impact of the increase in remote work on our society is indirect. However, companies where remote work is impossible due to their operational structure or those closely linked to China are suffering a fatal blow from this crisis, casting a red warning light on our economy.

The former is a case where operations are paralyzed because employees become infected with COVID-19, like the cluster infection at the call center in Guro-gu, Seoul. The latter refers to cases where companies with factories in China, such as Samsung Electronics and SK Hynix, experience disruptions in operations due to delays in the movement of personnel caused by strengthened country-specific entry and exit procedures.

In February, the UK's Financial Times named South Korea as the country most likely to be affected by fluctuations in China's GDP. This reflects just how high the South Korean economy's dependence on China is. Given the scale of trade and geographical distance with China, South Korea took proactive measures against COVID-19. Following the 31st confirmed case, the number of domestic COVID-19 cases increased rapidly to over 7,000, while the number of people tested also exceeded 200,000. This is a higher figure than that of any other country.

The COVID-19 crisis, which was regarded as a problem unique to East Asia as recently as March, is entering a new phase as confirmed cases surge in Italy, Iran, and the United States. CNN began referring to the situation as a pandemic even before the World Health Organization (WHO) officially declared it. Stock markets in major countries around the world are hitting daily lower limits, heightening economic uncertainty.

In January, Kim Yong-beom, First Vice Minister of Economy and Finance, stated, “Although the impact of the novel coronavirus on our economy is not yet significant, there are concerns about negative effects depending on how the situation unfolds.” Now, a situation that truly warrants concern has arrived. As the political and economic impact of COVID-19 grows, events that were unimaginable last year are unfolding in the first quarter.


Major trade shows canceled one after another, new product launches face setbacks
COVID-19 is transmitted through droplets. As a result, people are avoiding places where large crowds gather, causing the start of the school year for elementary, middle, and high schools nationwide to be delayed by about a month, and religious events and gatherings are being replaced by online alternatives. Universities are struggling to build remote learning infrastructure in order to minimize face-to-face classes.

Large-scale exhibitions that inevitably attract large crowds are being canceled one after another. In Korea, Semicon Korea 2020, a semiconductor equipment exhibition scheduled to be held for three days from February 5 to 7, was not held.

Overseas, MWC 2020, a telecommunications equipment trade show, went ahead with its plans only to eventually cancel the event. The Consumer Technology Association (CTA) announced that it is postponing CES Asia 2020, which was scheduled to be held in Shanghai, China, from June 10 to 12.


The Impact of COVID-19 on the IT Industry
While various IT technologies and products are being used to block the spread of COVID-19, control the spread, and treat the disease, restrictions on movement are having an impact across many sectors.

TrendForce released a report last February investigating how each IT industry is being affected by COVID-19. According to the report, while some automated facilities are not expected to be significantly impacted, sectors requiring a large workforce are expected to inevitably suffer a blow.

The semiconductor industry is expected to be partially affected. The foundry industry is largely automated, so the impact of COVID-19 is limited. However, restrictions on the movement of workers at Chinese semiconductor manufacturing sites have caused a labor shortage, which may prevent short-term operating rates from recovering to their original levels. Nevertheless, since the IC design sector is expanding its design and verification environments based on cloud technology, foundries equipped with remote work conditions are not facing any issues.

There is no expected impact on memory products. On the supply side, manufacturing operations at China-based DRAM and NAND flash production bases—such as Samsung’s Xi’an fab, SK Hynix’s Wuxi fab, YMTC, CXMT, and JHICC—are expected to face no major issues as they are highly automated with very low labor requirements. Materials have already been secured prior to the Lunar New Year, so a short-term shortage appears likely to be avoided; furthermore, holding special national licenses ensures that product delivery across China remains unimpeded even during quarantine periods. On the demand side, the impact is also minimal as demand from data centers continues to rise.

Display panels are expected to be somewhat affected. While display panel manufacturers are maintaining maximum production, backend module manufacturers, downstream brands, and ODM manufacturers are facing manufacturing uncertainty. Manufacturers in various Chinese cities had planned to resume operations on February 10. However, as the spread of COVID-19 has not subsided, the resumption date has been slightly delayed, and logistical uncertainty has increased due to movement restrictions. Although TV panel prices are expected to continue their upward trend, monitor and laptop panels are likely to face price uncertainty, so the situation will need to be monitored closely.

The optical communications industry is already being significantly affected. Since the headquarters of YOFC and Accelink, which produce optical fibers necessary for 5G base station connections, are located in Wuhan, the related industry is expected to be affected for the time being. The market size of fiber optic companies in Wuhan accounts for 25% of the global market, and it appears that they will have a sufficient impact to meet the demand for 5G fiber optics, which is estimated to be twice that of LTE.

The IoT sector is expected to be partially impacted. While manufacturers including Huawei are resuming production, the launch of new products is being delayed as operations at Xiaomi and MediaTek, which have research centers in Wuhan, have been suspended. Furthermore, video surveillance equipment makers such as Hikvision and Dahua Technology are shifting their production processes to manufacture thermometers, which are currently the most critical items, and it is expected that it will take more time for these companies to return to normal operations.

The 5G industry is expected to be significantly impacted. Most Chinese telecommunications bids, including contracts for 5G infrastructure construction and application procurement, have been postponed. Furthermore, since most suppliers of key 5G base station components, such as PCBs and fiber optics, are located in Wuhan or other parts of Hubei Province, this is expected to affect the supply of 5G equipment.

The wearable industry is expected to be partially affected. The assembly of products such as smartwatches and Bluetooth earphones is primarily carried out in Guangdong, Jiangsu, and Zhejiang provinces. Although work is scheduled to resume in mid-February following the end of the Chinese New Year holiday, production volume in the first quarter may decrease due to launch delays caused by labor and material shortages. As the peak season for wearable devices falls in the second half of the year, the impact on leading global products does not appear to be significant. However, it appears that losses in the first half of the year will be unavoidable, as products for the Chinese domestic market may fall behind in production for the global market.

Smartphone manufacturing is labor-intensive, so it is expected to be affected to some extent by COVID-19. Smartphone production in the first quarter decreased by 12% year-on-year, and shortages of components in the upstream supply chain, including passive components and camera modules, are also appearing, suggesting that smartphone production in the second quarter will be negatively impacted. Issues in the Chinese market could lead to a decline in consumer purchasing power, and smartphone production in 2020 could fall by 1.3% year-on-year, potentially marking the lowest level since 2016.

Laptops, LCD monitors, and LCD TVs are also expected to be affected. Even if production resumes, productivity will plummet due to shortages of labor and all types of materials and components. Since the manufacturing processes and material demands for TVs and monitors are similar, shipments will decrease in both industries. The material shortage for laptops is even more severe; facing existing shortages of hinges and PCBs, shipments for some laptop brands are expected to decline significantly.


IT industry adding strength to overcome COVID-19
The Chinese IT industry is applying its capabilities to the field in response to the COVID-19 outbreak. China Unicom, China Mobile, Huawei, ZTE, and others are prioritizing the deployment of commercial 5G networks in areas affected by COVID-19, and Lenovo has supplied the necessary computing equipment for local facilities.

Alibaba is providing AI capabilities for vaccine and new drug development to research institutions for free. Shanghai health authorities used AI voice assistants to screen suspected COVID-19 patients instead of making direct phone calls to each household, and are utilizing autonomous robots and drones for epidemic prevention.

In Korea as well, COVID-19-related solutions are being provided free of charge. Array Networks is offering remote security access gateway solutions free of charge to companies preparing for remote work, while DS Lab Global is providing a free AI pneumonia diagnostic service based on research results showing that chest CT scans performed in the early stages of COVID-19 are useful for early diagnosis of infection.

The Ministry of Science and ICT and the National Information Society Agency (NIA) are donating cloud resources in cooperation with the PaaS-TA Alliance (KT, NBP, NHN, and Koscom), a domestic cloud enterprise consortium. Applications developed and provided directly by the general public, such as Corona Map and Corona Doctor, face a significant personal burden due to the lack of a support environment. To alleviate this burden, the cloud resources provided include a PaaS-TA-based cloud platform that supports the development of apps and web services, as well as cloud infrastructure capable of responding flexibly to surges in network traffic.

With the onset of the COVID-19 pandemic, new technologies are being utilized or are required in various fields, and as movements to refrain from outdoor and group activities emerge, new lifestyles such as the 활성화 (activation/growth) of telecommuting, delivery culture, and remote education are appearing. Therefore, IT companies must advance new technologies to suit reality in line with these trends and proactively respond to newly emerging services.

Meanwhile, if you have respiratory symptoms or suspect symptoms of COVID-19, you must consult with a local public health center or the 1339 call center before visiting a screening clinic.