Interesting piece in Forbes today about the cross-currents caused by the COVID crisis.

Here are the money quotes:

• certain segments are experiencing a boom, especially technology companies
• the electronics segment has benefited from the outbreak because of a surge in buying by both consumers and businesses in electronics equipment
• uncertainty about the pandemic, the recovery, and the sustainability of demand, it’s unclear if the outlook is for a continued boom or a delayed bust
• the timing of the outbreak in China worked well for the electronics industry. With the Chinese New Year holiday approaching, companies throughout the electronics industry, from raw materials to finished goods, had built up inventories prior to the lockdowns in China
• the industry still faced short-term spot shortages and shipping issues but escaped the outbreak relatively unscathed
• [as] people around the globe were forced to self-isolate, consumers began buying up new electronics gear to support the shift to working from home, video conferencing, and to enhance their home entertainment experience
• this demand is not sustainable and may be pulling in sales that may have occurred later in the year
• many communications, cloud service providers, and e-tailers had to scale to meet rising demand
• the telecommunications industry was already benefiting from the rollout of 5G networks. As a result, the boost in network and service infrastructure equipment will likely last through most of 2020 and the boost from 5G through the next several years
• with strong demand and concerns about potential supply disruptions from the outbreak, many companies throughout the electronics value chain have been over ordering or even double ordering
• this not only artificially inflates demand; it can distort demand exponentially as your work back through the value chain towards the raw materials and basic building blocks like printed circuit boards and semiconductors
• the industry has experienced this situation with previous downturns like the telecom bust in 2001 where companies were over ordering on unrealistic forecasts
• Some believe that the boom will continue because the virus will run its course and fade going into the summer months and that consumer demand will quickly bounce back in the second half of the year
• predictions that demand will quickly snap back are highly questionable
• spending on goods and services that consumers use every day will likely see the fastest rebound
• demand for big ticket items, such as durable goods, vehicles, real estate, and luxury items will take longer to recover
• if the outbreak drives long-term changes in society, such as an increase in on-line education, telemedicine, and telecommuting, then the demand for electronics equipment will increasingly be considered core necessities
•  it is still challenging to determine what that demand curve will look like based on Q1 and limited Q2 data, and a bust, however temporary, may still be coming later this year
• patience and caution are called for right now  — Forbes