Wuhan: Who’s Been Impacted?

Article By : Clover Lee

[Editor’s note: During the Wuhan lockdown, the General Office of the State Council issued notices to extend the 2020 Spring Festival holiday by a week.

Most provinces and municipalities in China followed that notice and told businesses not to resume work before Feb. 10 at the earliest.

The Hubei Provincial Government stipulated that various enterprises in the province will resume work no earlier than 24:00 on Feb. 13.

In the context of the Wuhan lockdown and the delay in resumption of business, what’s happening to the companies in Hubei Province? And how will that affect the supply chain inside and outside China? Here’s what our editorial team at ESM China, EE Times’ sister publication, has found out thus far.]

At present, Wuhan, along with most cities within Hubei province, is in a state of lockdown. Obviously, the industries — ranging from transportation to catering and tourism within the province — are significantly affected.

The lockdown is hitting key industrial sectors. According to our database, Wuhan excels in three sectors — telecommunications, automotive, and pharmaceutical. The city also has three world-class industrial clusters. They include making display panels and memory/optical communications; automobiles and parts/components; and biomedicine and medical devices. The region has four national industrial bases or centers of expertise: storage, cybersecurity, EVs/connected cars and aerospace.

Wuhan, the capital of Hubei, is the composite name of the three former cities (and now districts) of Hankou, Hanyang, and Wuchang. The city is located at the confluence of the Han River and the Yangtze River. It is 600 miles from the sea, and halfway between Shanghai and Chongqing.

Its geographical location makes Wuhan a transportation hub in China. But the region is also a hub for many corporations. The province lists as many as 106 companies, 60 of them in Wuhan. Others are based elsewhere in Hubei province.

Look closely: Hubei Province has more than 20 companies in the electronic communications industry, 11 in pharmaceuticals, and four in automotive. The outbreak of coronavirus has prompted related enterprises in Hubei province to suspend production and postpone resumption of work. This is likely to have a ripple effect throughout China.

Who’s who in Wuhan

Our database shows about 20 industrial-chain companies listed in Hubei.

They include Wingtech, San’an Optoelectronics, Techsem, Yingtong Telecommunication, FiberHome Telecommunication, and Wuhan Fingu. These companies are involved in semiconductor components, semiconductor equipment, RF front ends, optical modules, optical communication equipment, and LEDs, among others.

Below, we created a table for “Who’s Who” in Wuhan. While the list is not meant to be exhaustive, we believe this gives a good snapshot of which high-tech companies are located in the region.

 

 

Industry chain companies are facing challenges

Products made by companies in Hubei will affect both the upstream and downstream supply chains of each industrial sector. This is partly because some companies are operating on a different schedule for restart.

Industrial chain companies, even if their factories return to function, could face unavoidable challenges. Beyond their control are logistics and transportation, as well as the absence of employees who went away for the holiday and can’t get back. Shortages of materials are also a concern.

Moreover, since the coronavirus outbreak, companies must pay closer attention to their employees’ health.

For example, if one employee is diagnosed with a confirmed case of coronavirus, protocol requires either shutdown or isolation of the entire plant. In this light, employee health becomes an issue that could easily affect the entire supply chain.

Industry insiders in China laid out the most optimistic scenario:

The epidemic situation will be completely lifted by mid- to late March, and the industrial chain will gradually return to normal supply in April. By that time, the market demand will pick up and the capacity of the industry chain will catch up quickly.

How are they coping with lockdown?

We reached out to several companies to see how they are coping with the lockdown. Most downplayed the impact of the epidemic. Some explained that, although they might be registered in Hubei, their operations are scattered throughout China or even overseas.

1. Wingtech: Saved by dispersal

Although the original registered address of Wingtech is Huangshi City, Hubei Province, its main factories are scattered overseas and in other cities in China. The company explained, therefore, that Hubei’s closure has not impacted its business.

Wingtech’s overseas factories reportedly did not stop during Lunar New Year. Domestic factories were originally expected to resume work at the end of January. Among them, a factory in Jiaxing was scheduled to resume work on Jan. 30 and a Wuxi factory re-opened on Jan. 31. At present, the company’s R&D and production are operating normally.

2. San’an Optoelectronics: Factories elsewhere

San’an Optoelectronics is mainly engaged in research and development and application of epitaxial wafers and chips related to new compound semiconductor materials such as gallium arsenide, gallium nitride, silicon carbide, indium phosphide, aluminum nitride, and sapphire.

San’an’s factories are concentrated in Xiamen and Quanzhou. A new factory in Ezhou, Hubei province is under construction. With no production in Hubei, the epidemic’s impact on San’an Optoelectronics is minimal.

3. Wuhan Fingu: Ready for a rainy day

On Feb. 3, Wuhan Fingu claimed that it is weathering the epidemic because of its Spring Festival contingency plan, stocking up inventory reserves for production delivery during and after the holiday. During the Spring Festival, a small number of employees worked overtime to handle delivery of urgent orders. Currently, domestic cargo logistics and transportation and highway channels are unblocked, leaving the company unfazed by the virus.

4. CSOT: A short-term lag

TCL Group announced that China Star Optoelectronics Technology (CSOT) has two plants in Wuhan to produce small and medium-sized displays. The epidemic is causing short-term delays in supplying some production materials. The company, however, is doing workarounds with key suppliers to coordinate the logistics that will get the materials it needs. This will require “adjustments” in production and operation strategies.

5. BOE: Wuhan production wasn’t ready anyhow

BOE has a 10.5-generation TFT-LCD production line in Wuhan, designed to produces 65- and 75-inch high-resolution LCD panels for TV manufacturers. However, the line has yet to reach its mass-production phase. So any downstream impact is limited.

6. Corning: Factories to spare

Corning’s glass substrate project went into production in 2019. It already has three factories in Beijing, Chongqing, and Hefei in China. Its downstream impact should be confined to Hubei’s internal panel factory.

7. Yangtze Memory Technologies Co., Ltd. (YMTC) and XMC: All is good

Reportedly, the 3D NAND chips of YMTC and the NOR flash and CIS chips produced by XMC have shipped normally through special channels. The two companies also reported no current shutdown or logistics delays.

However, further spread of the epidemic could pose challenges.

8. HSMC: No machines, no shipments

Wuhan Hongxin Semiconductor Manufacturing Co., Ltd. (HSMC) said it is waiting for new machines. If the epidemic delays delivery of the equipment, R&D and production will feel the impact.

It is expected that during Q1–Q2 of 2020, HSMC machine equipment will enter a “peak period.” New equipment already installed consists mainly of lithography machines. More equipment is scheduled to be in place after March.

9. TKD Science and Technology: Disinfected

On Jan. 31, TKD announced its subsidiary TKD Crystal’s early return to work, as it received an urgent order for epidemic prevention and control supplies from an important medical device company. The company immediately contacted the Suizhou Public Security Bureau. After obtaining permission, the inside and outside of the TKD Crystal plant were disinfected and the company undertook protective measures.

The company completed the work of source allocation, capacity adjustment, warehouse delivery, and delivery of its products within three hours. In the afternoon of the same day, all goods were loaded by 5 p.m. and delivered on time at 9 p.m. TKD has promised to maintain production while the epidemic rages.