Coronavirus Threatens Tech Hub Operations, S&P Says; Applied Materials Affected
China's coronavirus outbreak is threatening operations "in the world's largest tech manufacturing hub," said S&P Global Ratings Thursday. Its "base case" is that the virus will be contained globally next month, and assumes "no new transmissions" in April. That would…
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allow travel and logistical restrictions to be "unwound" by the middle of Q2, it said. If the epidemic "proves more difficult to contain, the effect on the tech sector could be extensive," it said: "Lengthy factory shutdowns or significant underutilization could materially lower the global output of tech components, subassemblies, or finished goods." Applied Materials dispatched “business continuity teams” to the regions in China hardest hit in the coronavirus outbreak early in the crisis, said CEO Gary Dickerson on a fiscal Q1 call Wednesday. “With travel and logistics restrictions, we do expect changes in the timing of revenues during the year. We are actively managing the situation in collaboration with our customers and suppliers.” Q1 ended Jan. 26. The company's display business will feed off “all of the trillion connected devices that will be happening,” and in 2021 will be “up a fair amount over what we see in 2020,” said Dickerson. “The capital intensity is rising as new technologies are adopted, so we see a good opportunity in our core business.”