Major American tech companies have shown growing concern about the adverse effects the closing of stores and offices in Asia to their supply chains. The companies' top supplier for a number of consumer products have been declared as incapable of producing the normal yields that could lead to tremendous losses in the industry.
Last Monday, Chinese stocks dropped by almost eight percent after Chinese markets opened for the first time since January 23, 2020. The yields led experts to claim that the lower yield would significantly affect tech sales since China is a major market for its goods.
According to financial analysts at Goldman Sachs, Chinese gross domestic product growth would decrease by 1.6 percent compared to last year's values at the same quarter.
The firm's equity research team suggested that producers of smartphones and other consumer electronics would be adversely hit by the decline that could result in losses of revenue and productivity. It was also discussed that manufacturing throughout China could also be affected where most of the major US tech companies' production plants are located.
A Harvard business school professor Willy Shih claimed that every factory in the great coastal manufacturing hubs in several provinces in China had been shut down. Furthermore, several tech companies also limited travel to these areas, which could also cause delay in the manufacturing sector of the tech industry.
The article also claimed that tech companies who have actual operations in China had to take more stringent steps where its workers would be allowed only to work in their homes. Thus, US President Donald Trump, after finalizing phase one of the trade deal with China, has also struck a deal with France to delay online taxes to prevent Silicon Valley's tech companies from incurring more losses.
Apple CEO Tim Cook claimed that there exists uncertainty over the factories in China and that it would adversely affect the company's earnings. He added that the company has suppliers in China. However, given that the economic situation in China is showing slower signs of improvement, they have alternate sources.
Cook then said that Apple is working on mitigation plans that may help them recover from the expected production loss from China factories. He also said that there is, however, less assurance on the impact of the closed factories from that outside of China.
In other news, Quartz reported that some US tech companies are looking to enter the banking business. The report claimed that Goldman Sachs wants to widen its financial footprint by venturing into banking.
Additionally, Amazon was also reported to offer small business loans in the US. Goldman Sachs and Amazon were said to collaborate wherein the former is developing technology to provide lending for the latter's platform.
