Sony's electronics supply chain impacted by COVID-19 instability

Its manufacturing plants in Malaysia and the UK will be shut down until late April.
Written by Campbell Kwan, Contributor

Sony has announced that the coronavirus outbreak has hampered its supply chain, resulting in a wide-ranging impact across its electronics business.

According to a statement from Sony on Friday, the company's electronics segment has experienced supply chain issues due to the closures of its manufacturing plants in China and Malaysia. It added that the unstable flow of resources from suppliers in Asia has also contributed to its supply chain issues.

In late January, the Japanese tech giant shut down four of its manufacturing plants located in China. These plants were then reopened on February 9 and have begun to incrementally restart operations, but Sony noted that its Chinese supply chain issues still remain.

Both of its manufacturing plants in Malaysia, meanwhile, have been closed since March 18 due to mandates from the local government. It has also been ordered by the UK government to close its manufacturing plant in Wales until April 20. 

Due to these COVID-19 impacts, alongside lockdowns around the world and retailer closures, the sale of Sony's electronics products have been impacted, the company said.

Sony's businesses have also been impacted by factors such as restrictions on movement of people across national borders, making it difficult for Sony to send engineers to manufacturing hubs such as China and countries in Southeast Asia for the purpose of helping with new product launches or giving instructions on manufacturing.

On the flip side, its imaging and sensing solutions segment has not experienced any "material impact" yet, Sony said. It did note, however, that there is a potential risk for sales to be impacted by an eventual slowdown in the smartphone market from COVID-19. 

"Sony's primary customers in this segment are smartphone makers who rely on supply chains in China, and although recovery in these supply chains has led to sales gradually returning to normal levels, there is a risk that going forward sales could be impacted by a slowdown in the smartphone market," Sony said.   

The Japanese tech giant has also revealed that its consolidated results forecast would be revised and may be delayed due to the impacts of COVID-19 

"Depending on how the situation evolves, that impact could be large enough to eliminate the entire amount of the upward revision," it said.

"Sony expects that its consolidated financial results will continue to be impacted by the spread of infection from COVID-19 in the fiscal year ending March 31, 2021, which begins in April this year ... It is possible that the spread of COVID-19 could lead to delays in account closing procedures and other operations, making it difficult for Sony to proceed with this announcement as planned."

Sony's decision to revise its results follows in the footsteps of other tech companies around the world. Dell Technologies and VMware said last week that they have withdrawn their 2021 fiscal guidance as a result of the uncertain impact of the COVID-19 pandemic. Several other companies, including Twitter and Square, have similarly had to lower or withdraw their financial outlook due to the crisis. 

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