The rapid spread of COVID-19 across the world has not produced any heavy impact on suppliers serving the IoT market or the demand for services. So far, the most noticeable impact is a delay in communications and approvals, as more people are working from home. However, like many markets that support the global supply chain, IoT suppliers will be impacted, although it is unclear to what extent. With trade flows restricted either from less manufacturing or less business demand, IoT service providers are likely to experience a bit of downward pressure for their services, at least in the short term. If trade flows are further restricted, the most affected will probably be suppliers for fleet management and asset tracking/monitoring services, but only for the short term.*
Chinese suppliers in the IoT hardware markets, from chips to modules to gateways, have been somewhat mum on the impact of COVID-19 to their businesses. However, COVID-19 may be the trigger for companies to reassess their supply chains and dependence on Chinese products.
How things looked pre-Covid-19
Even before Corona companies were eager to be less reliant on China in terms of production dependency. Now we are learning once again that when China shuts down, global production is severely impacted. This reinforces the fact that companies outside of China will need to duplicate productions, meaning they will have production in both China and locally. Corona will accelerate the need to reduce dependency in order to protect businesses from the fallout we’re seeing now.
Localizing or expanding localized production in the US or Europe, though, means higher costs, specifically when it comes to labor. Automation, though, means less need for manpower on the line. Tackling this shift in production location has already been the long-term plan for most western industries but COVID-19 will probably cause a knee-jerk effect and accelerate the adoption of automation in manufacturing.
As this crisis has shown us, IoT has not penetrated manufacturing – Industry 4.0 – as much as we’d expect. There’s a lot of talk but it isn’t yet happening on a large scale. Very few production lines are connected, in part due to the way things were designed many years ago: manufacturing plants are not pre-enabled for IoT. And the ones that are connected? They’re mainly using WiFi, RFDI, and even cables.