Covid wave in China has Indian electronics cos worried about parts shortage

India may face a shortage in product supply between March and May if the Covid-19 wave continues in China beyond the Chinese New Year holidays starting on January 22, a report by the Economic Times (ET) said. Chinese suppliers are already not assuring the delivery timelines for orders placed in the past few weeks due to high Covid-19 infections, it added.

"If the Covid surge continues beyond the Chinese New Year as it is feared, there will be a massive shortage of components impacting availability of products like smartphones or electronics in March-May," Pradeep Jain, managing director of smartphones and electronics manufacturer Jaina Group told ET.

Indian companies have tried to order the products in advance but are unsure of the delivery. In some Chinese factories, 30-50 per cent of employees are down with Covid-19.

Currently, orders placed before December are being fulfilled by Chinese companies. The wave has also impacted component manufacturers.

"There are also some delays in shipment due to disruption in loading operations at the ports...Somehow we have scraped through till now. In case the infection rate turns for the worse and continues beyond the Chinese New Year, then it can become a major issue," Atul B Lall, managing director of manufacturer Dixon Technologies told ET.

Amid rising cases, Caixin/S&P's composite PMI compiled by S&P Global, which includes both manufacturing and services activity, rose to 48.3 in December from 47.0 in November in China, remaining in contractionary territory for the fourth straight month.

China has eased movement rules, but reports suggest that cases are rising rapidly.

On December 28, Reuters reported that China's official Covid-19 statistics showed only one Covid death between December 19 and 26. But it fuelled doubts among health experts and residents about the government's data.

The numbers were reportedly inconsistent with the experience of less populous countries after re-opening. The report quoted doctors saying that hospitals are overwhelmed with 5-6 times more patients than usual, most of them elderly. International health experts estimate millions of daily infections and predict at least one million Covid deaths in China in 2023.