Weekly Update: Global Coronavirus Impact and Implications

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COVID-19 Week 80 Update

As we write this last instalment of our weekly coverage of the COVID-19 pandemic (we will continue to cover it elsewhere, particularly its impact on the tech industry), we are reminded of the situation same time last year. The virus was rapidly spreading in different parts of the world. India had overtaken Russia to become the country with the world’s third-highest number of COVID-19 cases, with the US and Brazil taking the first and second spots, respectively. US top infectious diseases expert Anthony Fauci was warning his country that it was still “knee-deep” in its first wave of infections and the number of cases was yet to reach a satisfactory baseline. The weakness in the global economy due to the pandemic was being expected to reflect in the Q2 numbers even as the companies catering to the work-from-home (WFH) economy were looking at a windfall.

Coming back to today, the situation has hardly improved. The original virus may have moved out of focus, but it has left behind more virulent variants. Now, the most dangerous Delta variant is present in about 100 countries, according to the World Health Organisation (WHO). After ravaging India, this variant is now resulting in fresh waves in countries like Indonesia, UK, Russia, Iran, Colombia and South Africa. USA, India and Brazil continue to top the world in the total number of cases, though most daily new cases are now coming from Brazil, India and Indonesia. Fauci is now imploring Americans to get vaccinated to avoid another wave, triggered by the Delta variant this time. While the global economy as a whole has recovered, the recovery has been patchy, with the developing nations staring at weak annual numbers. Meanwhile, the companies catering to the WFH economy continue to report robust numbers.

What has changed is the availability of vaccines. But even here the developed world has benefited the most, thanks to the resources at its command. A big part of the world won’t get access to any vaccine till late 2022 or early 2023. The pandemic has exposed the weaknesses in supply chains, not just for vaccines but also for sectors as diverse as semiconductors and chemicals. Already, many countries have started taking measures to mitigate the risks on this front. The focus is on a reduction in dependence on other countries for critical supplies.

The pandemic has changed many things permanently and for the better. The issue of climate change is now taken more seriously. The lockdowns showed that nature can quickly heal itself under the right conditions. International cooperation is another beneficiary. The pandemic has taught the world that international problems require international cooperation.

COVID-19 Week 79 Update

Israel is the most vaccinated major country currently, with over 55% of its 9.3 million population having received both doses of the Pfizer-BioNTech vaccine. In May, the eligibility to get vaccinated was extended to the 12-15 age group. But the response from this age group has been lukewarm, a big cause for worry as the most virulent Delta variant of COVID-19 marks its entry into the country. On Thursday, the country’s health ministry reported 307 daily new cases on Wednesday, the highest since April. The ministry reportedly expects this number to jump in the coming days. However, the death rate is firmly in check, perhaps due to the high vaccination rate. According to the ministry, only one person died during the past two weeks.

Confident that the worst was over, Israel had relaxed most of the COVID-related curbs over the last few months. But the Delta variant has now forced the authorities to make an about-turn. The rule requiring wearing of masks indoors has been brought back even as the government rushes to vaccinate children. A “coronavirus commissioner” has been appointed for the first time to monitor arrivals at Israel’s main international airport. The interior minister says the airport will be shut if the situation worsens. The government has already postponed the planned reopening of the country to vaccinated tourists.

Meanwhile, the World Health Organization (WHO) says COVID-19 cases are rising again in Europe after two months of decline. A WHO official said the number of cases rose by 10% last week, warning a fresh wave would come “unless we remain disciplined”. The European Union’s (EU) disease control agency, European Centre for Disease Prevention and Control, estimates that the Delta variant will account for 90% of new cases in the EU region by August end.

COVID-19 Week 78 Update

The Delta variant of COVID-19 has spawned a deadlier variant, called Delta Plus. India, which has so far detected over 40 cases of Delta Plus, has already declared it as a “variant of concern”. The country reported its first death due to this variant on Wednesday. Ten other countries, including the US, UK and Russia, have also reported Delta Plus cases.

The Delta Plus variant has the spike protein mutation K417N, also found in the Beta variant first detected in South Africa. While studies are on to test the effectiveness of available vaccines against the latest variant, experts say it is resistant to monoclonal antibodies cocktail. On the chances of another COVID-19 wave, they say it could happen if people fail to follow COVID-appropriate behaviour.

Meanwhile, chief medical advisor to US president Anthony Fauci has described the Delta variant as the “greatest threat” in the country’s fight against the pandemic as it is more transmissible. According to Fauci, the Delta variant now makes up over 20% of new cases in the US, compared to 10% two weeks ago.

COVID-19 Week 77 Update

While the daily new COVID-19 cases globally have come down to mid-March levels, the pandemic continues to rage in many countries in South America, Asia and Africa. Among the Top 10 countries in terms of daily new cases (listed below), as many as six are seeing fresh spikes in cases due to the different COVID-19 variants in circulation:

  1. Brazil (↑): With only around 10% of its population receiving the first vaccine dose, Brazil still went ahead with organizing the Copa America football tournament. More than 30 players and officials have already tested positive.
  2. India (↓): Even as cases go down, the country is in the midst of a debate triggered by a statement from three officials of a key panel that there was no agreement among the panel members when the decision to double the gap between two AstraZeneca vaccine doses to up to 16 weeks was taken.
  3. Colombia (↑): The country is going through its worst COVID wave so far. ICUs in many cities are reporting full capacities. Quarantine measures taken in April-May have been undone by the large protests across the country which added to the increase in cases.
  4. Argentina (↓): Officials have cited the decreasing levels of cases to justify the resumption of in-person classes for more than 3 million children in the Buenos Aires province after a two-month suspension.
  5. USA (↓): The country has inked a deal with Moderna to buy 200 million more doses of its vaccine for primary vaccination as well as for a booster shot for those fully vaccinated if the need arises.
  6. Russia (↑): The country may be promoting its Sputnik vaccine globally, but only 10% of the citizens have been fully vaccinated so far, thanks to some hesitancy and skepticism. As a result, all Moscow city workers with public-facing roles have been ordered to get vaccinated.
  7. South Africa (↑): With a fresh spike in cases, the country has reimposed curbs on public gatherings and alcohol sales. President Cyril Ramaphosa says the fresh wave has put the country’s health system under pressure, with COVID-related hospital admissions rising by 59% in many areas.
  8. Iran (↓): The country has approved emergency use of its first homegrown vaccine after failing to procure sufficient vaccines from abroad. Iranians will vote on Friday to elect a new president. Projections are putting the voter turnout at a historic low.
  9. Indonesia (↑): Reports say quoting officials that more than 350 doctors and medical workers have caught the virus despite taking the Sinovac vaccine. Indonesia is projecting the current wave of infections to peak in July, with the Delta variant of COVID-19 becoming more dominant.
  10. UK (↑): A study led by Imperial College, London, says that the Delta variant of COVID-19 was responsible for a 50% rise in infections in the country since May. The fresh numbers came after Prime Minister Boris Johnson’s announcement to delay the lifting of pandemic-related restrictions to July 19 due to the rising cases of the Delta variant.

COVID-19 Week 76 Update

After ravaging India, the B.1.617.2 COVID-19 variant, which was first detected in the country and is now dubbed the ‘Delta variant’ by the World Health Organization, is spreading to the rest of the world. It is now present in as many as 60 countries and rapidly expanding there. Health officials the world over, including in countries with comparatively high vaccination rates, are alarmed. The Delta variant is estimated to be 50% more transmissible than the B.1.1.7 variant, first detected in the UK and now called the Alpha variant. The Delta variant can even affect those who have already had the infection. Public Health England data shows the Pfizer and AstraZeneca vaccines were only about 33% effective against the Delta variant after one dose, compared to 50% in the case of the Alpha variant. However, after two doses, the efficacy against the Delta variant increased to 88% and 60% for the Pfizer and AstraZeneca vaccines, respectively.

Clearly, vaccination remains important across variants. But thanks to the huge demand-supply gap, a major part of the world will have to bear the brunt of the Delta variant. Even in countries like the UK and US, where more than 40% of the population has been fully vaccinated, authorities are concerned over the Delta variant. In the UK, this variant has now overtaken the Alpha variant to contribute to more than 75% of the coronavirus cases. There has also been a noticeable increase in daily new cases and hospitalizations, so much so that the government has been forced to reconsider the plan to completely lift COVID-19 restrictions from June 21. Some experts are even warning of a third wave, though with fewer deaths thanks to vaccination. In the US, President Joe Biden and National Institute of Allergy and Infectious Diseases director Anthony Fauci have appealed to the country’s youths to get vaccinated to avoid a UK-like situation where the Delta variant is spreading more among those in the 12-20 age group.

COVID-19 Week 75 Update

The pandemic-triggered global chip shortage continues to hold strong with industry leaders hinting at a long haul. Some developments on this front during this week:

  • Intel CEO Pat Gelsinger says the global semiconductor shortage could take several years to resolve. He feels it could take “a couple of years” to meet the shortfall on the foundry capacity side.
  • Logitech CEO Bracken Darrell sees the shortage lasting 3-6 months, with some industry segments experiencing it for up to a year. The computer peripherals manufacturer is relying on new suppliers to meet its demand after facing shortages at its existing suppliers.
  • Dell CFO Thomas Sweet said during a post-earnings call that the component supply situation remained constrained even as the rising chip prices were affecting the company’s operating income.
  • HP, a leading global PC vendor, says the shortage will continue to affect its capability to meet the demand for its personal computers and printers till at least the end of this year.
  • Lenovo chairman Yang Yuanqing says the shortage will last at least 3-4 quarters more. However, Yang feels his company has managed the situation well to benefit from the strong demand for its products.
  • Tesla CEO Elon Musk says the prices of the company’s vehicles are increasing due to the challenges faced in procuring raw materials.
  • TSMC has started construction for a chip factory in Arizona. TSMC CEO CC Wei says the project remains on track to start production in 2024 using the company’s 5-nanometer production technology.
  • Japan has entered a tie-up with TSMC to develop chip technology in the country. Around 20 Japanese companies will work with the Taiwanese chip giant for the project.
  • Honchos from South Korea’s biggest conglomerates have asked the country’s president to pardon jailed Samsung Electronics vice-chairman Jay Y Lee to safeguard South Korea’s lead in the chip industry amid global shortages.

COVID-19 Week 74 Update

Counting the number of dead and infected due to COVID-19 has been a challenge ever since the pandemic started. According to the World Health Organization (WHO), the official numbers released by the governments the world over are a “significant undercount”. The UN agency’s estimates put the real number of deaths at 2-3 times higher than the reported figures. It calculates that the total number of deaths due to COVID-19 in 2020 was at least 3 million, compared to the 1.8 million reported officially. With the death toll going up more in Latin America and Asia now, it would be more about relying on estimates than the official numbers as the two continents largely lack proper reporting infrastructure. However, the WHO points out that even in the developed world, where the reporting systems are more reliable, undercounts are likely. For Europe, it puts the number of deaths in 2020 at almost double the 600,000 figure reported officially. Apart from the reporting infrastructure, the WHO says, people dying before getting tested for the virus are also responsible for some part of the variance between estimates and official numbers.

Nowhere is this difference between official and unofficial numbers more glaring than in India, which has recorded the highest official daily death toll for any country during the COVID-19 pandemic. According to the New York Times, even this record number is an undercount. After consulting more than a dozen experts, the newspaper has come out with three possible scenarios. As against the 26.9 million infections and 307,231 deaths announced officially till May 24, the newspaper’s “conservative scenario” puts the infections at 404.2 million and deaths at 600,000, while “a more likely scenario” puts the infections at 539.0 million and deaths at 1.6 million. “A worse scenario” puts the infections at 700.7 million and deaths at 4.2 million.

All these numbers point to the need for boosting efforts for vaccination. The International Monetary Fund (IMF) has proposed a $50-billion plan to end the pandemic by vaccinating at least 60% of the world’s population by the first half of 2022. The international financial institution estimates that doing so will inject around $9 trillion into the global economy by 2025 due to an early revival of economic activities. With rich nations likely to benefit more from this economic revival, there is a good incentive for them to be contributing towards this plan, feels IMF. Under the plan, the IMF is proposing widespread testing, lowering of restrictions on cross-border movement of vaccines and raw materials needed to manufacture them, donation of vaccines, upfront financing, investments to increase vaccine production, creation of sufficient infrastructure for vaccine deployment, and research into dose-stretching strategies.

COVID-19 Week 73 Update

The latest COVID-19 wave in India is showing signs of ebbing in the country’s urban areas, though not at the levels the government would like you to believe. On the other hand, the eastward movement of the wave continues, with some devastating scenes and figures which have only been recorded by the media to some extent. Lack of testing and shoddy data collection in these rural and backward areas ensure that we would never be able to understand the real scale of the pandemic there. Steps taken by different administrations to improve the situation have proven to be too little, too late.

To add to the woes, hospitals are reporting rising cases of black fungus, a disease that can lead to breathing problems, blurred vision, blackening of the nose, chest pain, blood in cough and even death if not treated in time. COVID-19 patients with comorbidities, particularly diabetes, and even doctors treating them are at risk here. Steroids used for treating COVID-19 can worsen diabetes in a patient.

Elsewhere, many East Asian countries are reporting daily records. Most of Thailand’s cases are coming from its prisons. Singapore has decided to shut its schools after finding that new variants, like the one found in India, are impacting more children than the previous strains. Indonesian authorities are anticipating a spurt in cases following celebrations marking the end of the holy month of Ramadan. In neighbouring Malaysia, a record 6,075 new cases were reported on Wednesday. In Vietnam, the fresh wave has resulted in temporary shutdowns in its industrial parks while Taiwan’s companies, including chip manufacturers, have announced measures to prevent the virus from affecting their employees. Japan has extended its third state of emergency till May 31 in Tokyo and other prefectures. Questions are being raised over the government’s decision to go ahead with the hosting of Olympics in July.

In Latin America, Brazil and Colombia are showing signs of plateauing of cases even as Argentina and Uruguay report doubling of daily cases. One distinguishing feature of the current wave in Latin America is that more young people are dying here compared to other regions.

COVID-19 Week 72 Update

If you thought COVID patients dying outside hospitals begging for oxygen and dead bodies lined up at crematoriums were the most horrifying scenes thrown up by the pandemic in India, then you are wrong. In scenes representative more of a different era from history, around 100 bodies were found floating on the river Ganges this week in two states in the country’s north. While the officials are yet to establish whether these bodies are of COVID victims, media reports talk of villagers immersing bodies of victims in the absence of wood needed for cremations. Even as India’s cities report a slight decrease in daily new cases, the countryside is facing the brunt of the second wave with poor healthcare infrastructure. This is also the area not properly covered by India’s much-criticized official COVID data.

According to the World Health Organization (WHO), India now accounts for 30% of COVID deaths globally. The UN agency has now declared the B.1.617 variant of COVID-19, first detected in India in October, as a “variant of global concern” following some studies indicating it spreads more easily than the original virus. There are three other variants in this category – first found in the UK, South Africa and Brazil. The WHO says the B.1.617 variant has been detected in as many as 44 countries so far. After India, the maximum number of cases of this variant have been found in the UK.

Even as India and other developing countries grapple with a huge vaccine shortage, a piece of disturbing news has come from Seychelles, a small island country in the Indian Ocean. Seychelles is the most vaccinated country in the world, with around 60% of the population having taken two doses of either Sinopharm or AstraZeneca vaccine.  But last week, according to the country’s health ministry, more than one-third of those testing positive had both doses. The WHO maintains that vaccinations alone can’t stop transmission of the virus.

COVID-19 Week 71 Update

India continues to report record COVID numbers. On Thursday, the country reported record daily new cases of 412,262 and record daily deaths of 3,980. Even in Nepal, which shares a long porous border with India, record numbers are being reported (daily new cases 8,605 and daily deaths 58 on Wednesday). According to the International Federation of Red Cross and Red Crescent Societies, Nepal is recording 57 times more cases than this time last month, with the towns bordering India “unable to cope with the growing number of people needing medical treatment”. The Himalayan country was forced to suspend its vaccination programme last month in the absence of supplies from India and China.

In India, the second wave is now spreading eastwards, a region with poor health infrastructure compared to the rest of the country, even as other regions continue to report record numbers. Experts say the second wave will hit its peak around May 15. At the same time, a top government expert says a third wave is inevitable, and it will require modifications in the vaccines to make them effective.

On the vaccination front, the US has finally decided to back the demand for a global waiver on intellectual property rights for COVID-19 vaccines. India and other countries have been lobbying at the World Trade Organization (WTO) for the waiver. World Health Organization chief Tedros Adhanom Ghebreyesus described the US move as a “monumental moment in the fight against COVID-19”. However, it would take months before this move translates into action on the ground, as WTO decision-making is based on consensus between its 164 members. Besides, the pharmaceutical industry has expressed its unhappiness over the US decision, saying it would affect its response to the pandemic.

COVID-19 Week 70 Update

The COVID-19 situation in India has now completely spiralled out of control. The official data, which has been repeatedly slammed by experts for underreporting numbers, on Wednesday registered record daily new cases and deaths of 3,79,257 and 3,645 respectively. Total deaths crossed the 200,000 mark on Tuesday. According to the World Health Organization (WHO), India now accounts for 38% of the total cases recorded globally. The multilateral body’s calculations show that the B1617 variant (or the double mutant variant) of the virus detected in India has a higher growth rate compared to other variants found in the country. The double mutant variant has so far been detected in 17 countries, including India, US, UK and Singapore.

The global community has moved fast to send emergency aid to India. The US, UK, Russia and many other countries are sending hundreds of oxygen cylinders, oxygen concentrators, ventilators, masks and other medical equipment badly needed by India. Besides, the US has promised to send a part of its vaccine surplus to India, in addition to raw materials required to produce vaccines. It will take some time before we start seeing the impact of all this aid on the ground. Right now, it’s apocalypse written all over India’s cities and towns. Dead bodies are lining up outside crematoriums and graveyards that have run out of space. Public parks and parking lots are being taken over to accommodate the dead. The poor are begging for oxygen outside the hospitals while the rich are doing the same on social media.

The Indian government is in war mode to stem the tide but all efforts seem to be falling short. On Wednesday, when the registrations opened for vaccination for those aged 18-45, the government website meant for the purpose crashed. Many are questioning the government’s rationale in not imposing a lockdown. “At this point lives are so much more important than livelihoods,” tweeted Bhramar Mukherjee, noted epidemiologist from the University of Michigan.

COVID-19 Week 69 Update

India’s hospitals are currently witnessing the kind of apocalyptic scenes that were seen by the hospitals in the US, Italy and other countries last year. Staff, beds, medicines, oxygen, ventilators, all are in short supply even as crematoriums and graveyards work non-stop to tackle the surge in dead bodies reaching their doors. Official statistics for Wednesday put the daily new cases at 295,041 and daily deaths at 2,023, both being the highest ever. But as was the case in the first wave, in the current wave too the experts are sceptical about the official data. They are projecting an as much as ten-fold difference between the official and unofficial numbers for daily new cases and a three-fold difference for daily deaths. Media reports seem to tally with the expert assessments. They talk about crematoriums receiving many more bodies for COVID protocol funerals than those that left the local hospitals the same day. Witness accounts mention how the metal parts of crematorium furnaces have started melting with round-the-clock use, something which was not visible during the first wave.

The Indian government has announced some steps to tackle the fresh wave, while saying another national lockdown is not possible as it would disrupt economic activities. The governments of the affected states have announced partial lockdowns (usually for night hours). On the vaccination front, India has reduced the minimum age for vaccination from 45 to 18. Vaccine manufacturers have been allowed to sell a part of their production in the open market. But the question remains, where is the vaccine stock to meet these requirements? The country, which till some weeks ago was the world’s biggest vaccine exporter, is now grappling with a huge shortfall. The Serum Institute of India, which is the world’s largest vaccine maker and meets 90% of India’s COVID vaccine demand, produces around 65 million doses per month currently. But taking the current daily vaccination average of 3.5 million doses per day, India needs 105 million doses per month. Add to this around 600 million people in the 18-45 age bracket who will become eligible for vaccination on May 1. The government has announced funding for the vaccine manufacturers to expand capacity but that is expected to come not before July.

In extraordinary situations like these, governments the world over face allegations of being tardy in their response (a local court has slammed the Indian government for “not waking up to reality”). While such accusations are not totally unfounded, what is more important is to learn from these never-seen-before situations and avoid a repeat. The coming days will put to test the combined wisdom of the human race on this count, as a fresh and more virulent COVID wave looms in many more countries.

COVID-19 Week 68 Update

The world is now in the grip of a much stronger second wave of COVID-19 and fast approaching the peak of 845,412 daily new cases that was hit on January 8, 2021. India, followed by the US, Brazil, Turkey and France, is the biggest contributor here. On Wednesday, the South Asian country hit a fresh all-time peak of 199,569 daily new cases, with daily deaths also rising proportionately. While the US is showing a plateauing graph of daily new cases, Brazil is witnessing a fresh surge.

This second wave is being attributed to the various variants of the virus that are now in circulation globally, besides the people and governments dropping their guard. Not all of these variants can be tackled by the vaccines currently available. India, for instance, has reported a ‘double mutant’ variant (two mutations in the same virus) that has already resulted in a few cases of reinfection post-vaccination, according to local media reports. Similarly, an Israeli study has concluded that a South African variant can “break through” the Pfizer-BioNTech vaccine to some extent.

This is not to say that vaccination is entirely ineffective. What these examples highlight is the dead heat we find ourselves in. To find whether the virus(es) will beat all vaccination efforts or vice versa, we will have to probably wait till the yearend or early next year. An overwhelming majority has no hopes of getting vaccinated within the next six months, and these are the very people facing the brunt of all kinds of variants in circulation. The longer they remain unvaccinated, the higher the chances are of deadly variants reaching countries with high vaccination rates and reinfecting them.

Whenever pushed to drop profit motive for a humanitarian cause, companies globally are usually evasive. Therefore, it didn’t come as a surprise when the vaccine companies failed to positively respond to the appeals made to them last year by many NGOs and multilateral bodies to share their formulas with generic manufacturers. In a fresh move, more than 160 former heads of state and Nobel laureates, including Joseph Stiglitz, Gordon Brown and Francois Hollande, have asked US President Joe Biden to push for an intellectual property waiver for COVID-19 vaccines. Let us hope for the best.

COVID-19 Week 67 Update

India is headed towards a COVID crisis of gargantuan proportions. This week, the country crossed its peak of daily new cases that it hit in September during the first wave. Not only this, the second wave is showing a steeper climb. From 103,793 new cases on April 4 to 126,315 new cases on April 7, the number has risen by 21.7% in just four days. Experts are blaming the fresh spurt on people and politicians dropping their guard and participating in large gatherings. While the central government has so far not indicated imposing another lockdown, some state governments have imposed night curfews in affected cities, besides shutting malls and places of worship.
India, which is the world’s largest vaccine manufacturer, has so far administered 94 million doses, placing it behind the US and China. All Indian residents above the age of 45 are eligible for vaccination. In a meeting with state chief ministers on Thursday, Prime Minister Narendra Modi rejected calls for lowering this age, saying the poor and elderly need to be prioritized. Many states have complained of vaccine shortages. But India’s health minister maintains that there are sufficient shots. India has already reduced the exports of the AstraZeneca vaccine, which meets 90% of its demand, to cater to the domestic requirement. In addition to laying stress on testing, the prime minister called for a “vaccine festival” from April 11 to 14 to vaccinate as many people as possible.
Meanwhile, AstraZeneca’s tale of woe continues. The UK now wants those under 30 to avoid taking the vaccine in case an alternative is available, as evidence has emerged that it may cause a rare type of blood clot in the brain. This comes after many countries in Europe recommending such a minimum age. Australia, South Korea and the Philippines have also put the vaccine on restricted use while the African Union has dropped plans to buy it. The world, developing countries in particular, is banking heavily on this vaccine due to the scale of its production and ease of storage.

COVID-19 Week 66 Update

The pandemic-triggered semiconductor chip shortage has spurred action on different fronts even as short-term prospects worsen. While governments are focusing on augmenting domestic capacity, chipmakers are busy in firefighting (literally in one case) and planning for the long term, besides dealing with takeover overtures. Some key developments on the chip front from the week gone by:

  • Japanese chipmaker Renesas Electronics, which controls around one-third of the global market for microcontroller chips used in automobiles, has said it would take at least 100 days to regain normalcy in production after a fire damaged 23 machines at its plant on March 19. Meanwhile, the Japanese government has asked Taiwanese companies to assist in alternative production.
  • Samsung says the production at its chip plant in Texas, which remained affected for over a month due to bad weather on February 16, has now reached near-normal levels.
  • TSMC says it will invest $100 billion over the next three years to increase production capacity at its chip plants. This move follows Intel’s recent announcement to invest $20 billion in expanding its advanced chip-making capacity.
  • India’s government is offering more than $1 billion in cash to each semiconductor company that sets up production units in the country, according to a Reuters report.
  • Hyundai has decided to suspend production at one of its plants in South Korea from April 7 to 14 following a shortage of chips.
  • China’s Wise Road Capital and its partners have entered a $1.4-billion deal to acquire South Korea’s Magnachip Semiconductor Corp, a display and power chip maker.
  • Micron Technology Inc and Western Digital Corp are in a potential race to buy Japanese semiconductor firm Kioxia Holdings Corp, the world’s second-biggest manufacturer of flash memory chips, says a Wall Street Journal report quoting sources. The deal could value the Bain Capital-controlled firm at around $30 billion, the report adds.
  • US-based chip equipment manufacturer Applied Materials has announced that its $2.2-billion deal to acquire Japan’s Kokusai Electric Corp from KKR has been terminated in the absence of any positive indication on Chinese regulatory approval.

COVID-19 Week 65 Update

With the US, UK and some other countries showing a declining graph for daily new COVID-19 cases against the backdrop of increasing vaccination rates there, Brazil and India are now the new pandemic epicentres. A fresh wave of infections is spreading fast in the two countries, with Brazil reporting new peaks in daily cases and India’s cases touching five-month highs.

The surge in India has particularly alarmed the world. This is because India is also a vaccine manufacturing hub. In normal times, it caters to over 60% of the vaccine demand from developing countries. In the present pandemic, India has emerged as the biggest exporter of the AstraZeneca vaccine through a local firm, the Serum Institute of India (SII), which is also the world’s biggest vaccine maker.

However, following the emergence of the second wave, India decided to restrict the COVID vaccine exports, besides lowering the minimum age for vaccination from 60 and above earlier to 45 and above from April 1. While India is doing the right thing in prioritizing its population over other countries, what has compounded the situation is the country’s heavy reliance on the AstraZeneca vaccine, one of the only two vaccines cleared for use in the country.

India has committed to supply 200 million doses to low-income countries under the Covax programme of the Global Alliance for Vaccines and Immunisation (GAVI) and the World Health Organization (WHO). SII has a manufacturing capacity of around 60 million doses per month. GAVI says Covax has already notified participating countries that deliveries from SII will be delayed in March and April.

COVID-19 has brought to the fore weaknesses in global supply chains, from vaccines to semiconductors. Time for governments, multilateral bodies and businesses to get their act together.

COVID-19 Week 64 Update

Among the top 10 countries which reported the highest number of daily new COVID-19 cases on Wednesday, as many as six were from Europe. With the continent in the grip of a third wave of the virus, the less-than-projected supplies of various COVID-19 vaccines have triggered a blame game among the region’s countries. The European Union (EU) has threatened to ban exports of the vaccines to the UK over delay in deliveries of the AstraZeneca vaccine from there. The bloc says it is now thinking of linking the exports to the level of vaccination in a country, an allusion to the UK where more than 40 doses per 100 people have been administered so far compared to less than 20 per 100 in the remaining continent. The UK was quick to react, accusing the EU of brinkmanship and asking it to issue an explanation on its earlier assurances that already contracted exports would not be stopped. Further, on Thursday, the UK health secretary said the country would face vaccine shortages this month due to cuts from the Serum Institute of India, an AstraZeneca partner.

What has made the situation messy is some European countries’ decision to suspend the use of the AstraZeneca vaccine following cases of blood clot formation in the head of around three dozen recipients of the vaccine. The EU drug regulator says the vaccine is safe to use while the UK regulator says the incidence of blood clot formation was not more than what would have occurred naturally. Other countries, including Canada and India, too have announced to continue to use the vaccine. The World Health Organization (WHO), which cleared the AstraZeneca vaccine for emergency use last month, says the benefits of the vaccine far outweigh its risks.

COVID-19 Week 63 Update

Entering the second year of the COVID-19 pandemic, the virus continues to enjoy the upper hand in its battle with all efforts meant to contain it. More than our failure in quickly coming out with an effective vaccine or medicine, it is our failure to coordinate efforts towards a common goal that has hit the fight against the virus the most. According to Bloomberg, more than 334 million vaccine doses had been administered till Friday across 121 countries. The number is indeed impressive but what it fails to convey is the lopsided nature of the biggest vaccination programme ever. On one end of the scale are the developed countries from Europe and North America which have used their economic and political influence to procure vaccine supplies, including from plants located in developing countries. On the other end are countries from regions like Africa which have only the World Health Organization’s (WHO’s) sluggish vaccine distribution to look forward to. The following events from this week show all is not well on the vaccination front:

  • Europe is a divided house on AstraZeneca’s vaccine. While as many as nine countries have suspended its use following safety concerns, countries including France and Germany have ignored these concerns. A WHO panel is looking into the matter but the global body says “there is no reason not to use it”.
  • In another negative news on the AstraZeneca vaccine, the company has cut its target for supplies to the European Union to around 30 million doses in the first quarter, a third of its contractual obligations, according to a Reuters report. However, there is hope from Johnson & Johnson whose single-dose vaccine was cleared by the EU on Thursday.
  • According to a report in the New York Times, the US is sitting on tens of millions of vaccine doses from AstraZeneca even as many countries are desperately looking for supplies. These doses can’t be used in the US as they are still awaiting the clinical trial results. Trials conducted in many other countries have already cleared the vaccine.
  • Over 40 African charities blasted rich nations on Thursday for refusing to waive patents for COVID-19 vaccines, which would have helped bring down vaccine prices along with increasing their availability. This will only prolong the pandemic in poor nations, the charities said.
  • Unicef has asked countries for around $1 billion more to fund poor nations’ vaccination drives.

COVID-19 Week 62 Update

Many countries have been reporting a spurt in daily new COVID-19 cases for the past week or so. Experts are attributing this rise to new strains of the virus and the authorities and people becoming lax in following precautionary measures. In the US, President Joe Biden has come down heavily on some states’ move to end compulsory wearing of masks, describing such decisions as “Neanderthal thinking”. The World Health Organization (WHO) is alarmed too. “This virus will rebound if we let it,” warned WHO expert Maria Van Kerkhove at a briefing. In fact, the WHO projects that many countries in Europe will see a resurgence in cases in the coming days.

When the vaccines first came last year, the predominant view, including among experts, was that these will be effective in containing the virus spread. But since then, new variants of COVID-19 have cropped up which are not only resistant to the vaccines developed so far but can also evade the immunity developed by already infected people. As a result, experts have revised their forecast and are now talking about COVID-19’s impact lasting for “years to come”. This is not to say that the vaccines are completely ineffective. Experts acknowledge that even with the new variants, the current vaccines seem to prevent deaths and hospitalizations. Besides, companies will come out with updated vaccines to fight the new variants.

It is, therefore, important that the vaccination drive is stepped up, especially in the developing countries, which have been lagging so far. A part of the problem, as the WHO has been pointing out, is the hoarding of vaccine doses by rich nations. COVAX, the WHO-supported programme to provide vaccines to poor countries, is already feeling the heat from countries getting into bilateral deals with vaccine companies. The programme, which aims to send 237 million doses of the AstraZeneca vaccine to 142 countries by May-end, has seen a slow start, with Ghana and Ivory Coast becoming its first beneficiaries last week. “We can’t beat COVID without vaccine equity. Our world will not recover fast enough without vaccine equity, this is clear,” WHO Director-General Tedros Adhanom Ghebreyesus told a briefing.

COVID-19 Week 61 Update

There is no sign of any let-up in the Covid-triggered semiconductor shortage being faced by the automotive sector since last year. The US sanctions against China’s chip factories and just-in-time supply schedule of a typical automobile factory have only added to the problem. Chipmakers too are focused on meeting the spurt in demand from consumer electronics firms, which buy high-end and high-margin chips. As a result, auto companies are lobbying their respective governments to promote creation of chip manufacturing facilities at the domestic level. On the other hand, some governments have approached Taiwan to resolve the crisis. Some key developments on the chip shortage front this week:

  • US President Joe Biden on Wednesday announced a $37-billion plan to push chip manufacturing in the country. The US chip industry and auto manufacturers have been asking the government to take action on this front. Biden has also signed an executive order kicking off a review of supply chains for semiconductor chips, large electric vehicle batteries, pharmaceuticals and rare earth minerals.
  • Tesla has reportedly halted the production of the Model 3 at its California plant from February 22 to March 7. Tesla said in January it expected a temporary impact from the chip shortage.
  • Ford says it may have to cut its production by 20% in Q1 due to the shortage. General Motors says it has cut production at its plants in the US, Canada and Mexico.
  • Japanese auto companies’ global production dropped around 4.5% in January from last year due to production cuts after the chip shortage.
  • Renault said on Friday the chip shortage and other effects of COVID-19 could result in a volatile year for the French carmaker which reported a $9.7-billion loss for 2020.
  • Infineon, the world’s leading supplier of chips to the automotive sector, is expanding its capacity to meet the demand in the long term. It is also planning to open a new chip plant in Austria this year. Currently, Infineon and other such specialist chipmakers outsource some of their production to contract manufacturers like Taiwan Semiconductor Manufacturing Co Ltd (TSMC).
  • According to auto parts supplier Visteon, the chip shortage may bring down the global auto production in H1 2021 by 10% to 15%.
  • Taiwan’s economy minister said on Saturday her country’s chipmakers were doing “what they should” to address the problem.
  • Taiwan is facing a drought, pushing the island’s chipmakers to buy truckloads of water to ensure chip production continues.
  • Foxconn chairman sees only “limited impact” from the chip shortage as most of the company’s customers “have proper precautionary planning”.

COVID-19 Week 60 Update

Even as COVID-19 cases show a steady decline globally, the Ebola virus has reared its head again in some African countries. Guinea and the Democratic Republic of Congo have reported fresh cases of the virus which saw its worst outbreak during 2013-2016 in West Africa and killed around 11,000 people. The World Health Organization (WHO) has asked six neighbouring countries to remain alert for a possible outbreak, while helping Guinea arrange 11,000 Ebola vaccine units. Compared to COVID-19, Ebola fares better in terms of vaccines and treatments, thanks to the lessons learnt in the previous outbreak.

All this brings us to the question which is becoming louder with the waning COVID-19 pandemic: How likely are we to see another pandemic of this size in coming years? Most experts say it is very likely. As we are already seeing in countries including the UK, South Africa and Brazil, a virus has a tendency to mutate into different variants, some of them more dangerous than the original. And the more the number of people it infects, the more the number of chances it gets to mutate. Each body a virus infects is a Petri dish for it to grow and change. Besides, a virus or its mutant can stay dormant for years.

So, what can the people and governments do to avoid, delay, or limit another pandemic? Reducing our interaction with nature by opting for sustainable habits is certainly in. The way we react to a pandemic at an international level is also important. Many of the problems faced in the current pandemic could have been easily avoided with a united global response. Already, the clamour for a global mechanism to deal with such a calamity is growing. UK prime minister Boris Johnson wants an international treaty on pandemics to ensure countries share the relevant data and also have an early warning system in place. European Council president Charles Michel has supported Johnson’s call.

COVID-19 Week 59 Update

The vaccine developed by AstraZeneca and the University of Oxford has been dogged by delays and uncertainties both before and after its release. In the latest instance, a study in South Africa says the vaccine has little impact on a COVID-19 variant spreading fast in the country. Following the study, the South African government announced suspension of the programme to roll out one million doses of the vaccine. However, later it said it was considering a “stepped” rollout of the vaccine to monitor its efficacy. In the meantime, it has decided to use the one-shot Johnson & Johnson vaccine.

Experts around the world, including from the World Health Organization (WHO), were quick to jump to the defence of the AstraZeneca-Oxford vaccine. They were unanimous that it was too early to dismiss the vaccine as being ineffective. Some experts even raised questions on the South African study, saying it was conducted on a small scale and after testing the vaccine at an interval of four weeks between the first and second doses, even as evidence suggested that the vaccine was more effective at a longer interval between the two doses. Britain, where the vaccine is being used extensively, pointed out that it was effective in fighting the COVID-19 variant there. France said the vaccine worked well with “nearly all the variants”. The WHO said benefits of the vaccine outweighed any risks and the shot could be taken by all, including by those aged 65 and above.

Among the vaccines approved for use by different governments and international bodies, the AstraZeneca-Oxford one is the most crucial internationally, thanks to the geographical spread of its trials and production. While the wealthier nations are relying more on Pfizer and Moderna vaccines, developing countries, in particular, are betting heavily on the AstraZeneca-Oxford vaccine’s success. The COVAX scheme of the WHO and the GAVI vaccine alliance, which aims to deliver 1.8 billion doses to 92 poor countries in 2021, is relying heavily on the AstraZeneca-Oxford vaccine to make the programme successful.

Any inability of the leading vaccines to tackle any COVID-19 variant would put a big question mark on the global recovery from the pandemic.

COVID-19 Week 58 Update

COVID-19 has brought windfall profits to technology companies, as we have been reporting here. But at the same time, the unexpected surge in demand for products and services related to work-from-home and study-from-home has stretched the global supply chains like never before. The shortage of semiconductor chips which was noticed last year has now spread to the automotive sector. The following developments from this week convey the enormity of the issues being faced by automobile companies on this score:

  • General Motors has decided to cut production next week at four of its assembly plants in the US, South Korea and Mexico.
  • Nissan Motor has been forced to partially suspend truck production at its Mississippi plant in the US.
  • Volkswagen is considering entering direct contractual relationships with chip manufacturers, according to a Reuters report.

To be fair, besides the pandemic, there are other reasons contributing to this shortage, like under-investment in chip capacity over the recent years, geopolitical tensions and emergence of new products like electric vehicles. According to a Counterpoint analysis, this shortage is unlikely to end before H2 2021. However, the analysis predicts that beginning this year, leading foundries will enter a cycle of massive production capacity expansion that will continue till 2023. And far from triggering a glut, this expansion will still fall short of meeting the entire demand.

COVID-19 Week 57 Update

All the top 10 countries ranked by their total number of COVID-19 cases – US, India, Brazil, Russia, UK, France, Spain, Italy, Turkey and Germany – are now showing a declining graph in varying degrees when it comes to daily new cases. Globally, the total number of cases crossed the 100-million mark on Wednesday. Total deaths now stand at over 2 million. India’s government said on Thursday that out of its 718 districts, 146 had reported no new case during the last seven days. The government has decided to relax curbs on public swimming pools and cinema halls from February 1. Russia has also lifted a travel ban for India, Finland, Vietnam and Qatar that was announced last year.

Apple on Wednesday announced financial results for its fiscal 2021 Q1 ended December 26, 2020. Riding high on the new 5G-capable iPhone series, along with the pandemic-triggered demand for its laptops and tablets, the company posted a record revenue of $111.4 billion, up 21% YoY. International sales accounted for 64% of the quarter’s revenue, according to an Apple release. Research from Counterpoint’s Market Monitor service confirms this stellar show by Apple – for October-December 2020, Apple captured the top spot in global smartphone shipments, growing 8% YoY and 96% QoQ.

Microsoft on Tuesday reported a 17% increase in its revenue at $43.1 billion for the quarter ended December 31. Its revenue from Azure cloud computing service grew 50%. LinkedIn revenue increased 23% while Xbox content and services revenue increased 40%, according to a company release. Microsoft’s revenue from the productivity and business processes segment was $13.4 billion during the quarter and increased 13%. The mobile version of Teams has 60 million daily users now.

The pandemic has also popularized newsletters. Realizing their potential, Twitter has acquired an e-mail newsletter start-up, Revue, for an undisclosed sum to attract users who want to earn revenue from their followers. Twitter said it would bring down the paid newsletter fee to help authors retain more revenue from subscriptions.

COVID-19 Week 56 Update

After remaining below the global average for a major part of 2020, Africa’s COVID-19 death rate now stands at 2.5%, compared to 2.2% in the rest of the world. Africa Centres for Disease Control and Prevention director John Nkengasong says the second wave of the pandemic is more aggressive, with as many as 21 countries in the continent reporting a death rate above 3%.

Africa’s plight also brings into focus the efforts being made by multilateral bodies and countries for a timely delivery of vaccines to poor countries. Sadly, the pace here has been frustratingly slow. Under the COVAX scheme of the World Health Organization (WHO) and the GAVI vaccine alliance, 1.8 billion doses are targeted to be delivered to poor countries in 2021. But thanks to a shortage of funds, the scheme is yet to secure sufficient shots. According to GAVI, the 1.8 billion doses will be sufficient to cover 27% of the population in the 92 countries eligible under the scheme.

Some poor countries lack the regulatory infrastructure needed to clear vaccines for use and, therefore, rely on the WHO for clearances. The global body is planning to clear several vaccines for their rapid deployment in poor countries starting February.

The regime change in the US has come as a big relief in the efforts to combat the pandemic, not only in the country but also the world. On January 21, US’ chief medical adviser Anthony Fauci told the WHO that the US government under President Joe Biden was willing to join the COVAX scheme to help poor countries.

COVID-19 Week 55 Update

The COVID-19 situation will get worse before it gets better. With the vaccination drive seeing a slow start globally, many countries are coming in the grip of a fresh wave of infections. Sweden, which had been avoiding putting curbs on the movement of its citizens in contrast to other European countries, has now brought in tougher rules for social distancing at shopping complexes, private gatherings and gyms. The country will close businesses if the situation worsens.
China has registered its biggest jump in cases in over 10 months as infections surge in the Heilongjiang province. This comes just before a national holiday when millions of people usually travel. A paper by Chinese researchers published in the PLOS Neglected Tropical Diseases journal on Thursday said the number of people infected with COVID-19 in Wuhan could be three times the official figure. This conclusion was reached after analysing the blood samples of more than 60,000 people. Meanwhile, a World Health Organization (WHO)-led delegation arrived in Wuhan on Thursday to investigate the origins of COVID-19.
The Japanese government says it has detected a new variant of the virus in some travellers from Brazil. The variant has as many as 12 mutations.
The WHO hopes to launch COVID-19 vaccines in poor countries in February via its COVAX programme. It has asked countries to avoid striking bilateral deals with manufacturers so that poor countries can get access to the vaccines.

COVID-19 Week 54 Update

A fresh wave of the COVID-19 pandemic has gripped the world, whether due to a new strain of the virus or otherwise. In terms of daily new cases, the US (260,973 on Wednesday) is now followed by Brazil (62,532), UK (62,322), Germany (26,651) and France (25,379).

China on Thursday registered its biggest rise in daily cases in more than five months. The epicentre this time is Shijiazhuang, the capital of Hebei province, near Beijing. Over 200 cases have been confirmed in the city so far. Reports say the authorities are planning to test over 10 million people. On Wednesday, China said it was making arrangements for a visit by a World Health Organization (WHO) team looking into the origins of the virus. The statement came after the WHO expressed its concern over the delay in authorization for the visit.

Japan on Thursday declared a one-month emergency for Tokyo and three neighbouring prefectures after daily new cases hit a record in the capital. The government has avoided imposing wider restrictions due to their potential to cause economic hardships. According to Counterpoint’s Japan handset tracker, Japan’s smartphone sales plummeted 24% YoY in Q2 2020 but went up 10% YoY in the following quarter, supported by the government’s pro-economy stance in tackling the virus.

With the vaccine distribution campaigns still in their initial phases the world over, the fresh wave of infections will continue to inflict damage in the weeks to come. Stricter lockdowns like the latest one in the UK may have to be brought back.

COVID-19 Week 53 Update

There is no doubt the year 2020 will count among those which left an indelible mark on the course of history. Hardly any sphere of life has remained untouched from the COVID-19 pandemic. Many things have changed for the better and a few for the worse. Some of these changes will be permanent while others will depend on how early we are able to control the pandemic.

Climate change: Before the pandemic started, climate change was struggling to take prominence in human discourse. But COVID-19 has taught a valuable lesson — nature can quickly heal itself under the right conditions. With lockdowns in force globally, we saw pollution levels hitting multi-year lows and flora and fauna regaining some of the lost vitality. As soon as these lockdowns were lifted, we were back to square one. Expect policymakers to discuss effective mitigation of climate change more seriously in the coming year and beyond.

International cooperation: The pandemic has taught the world that global problems require global solutions. International cooperation was found wanting during the pandemic, whether in detection of the virus or development of vaccines. The post-pandemic world also requires a coordinated action on the economic and social fronts. Hopefully, the governments will get it right this time. There is an urgent need to give more teeth to multilateral institutions like the United Nations and World Health Organization.

Human behaviour: COVID-19 has imposed many restrictions on our normal behaviour, whether it is social distancing or wearing of masks. We have also “discovered” that work-from-home, study-from-home and shop-from-home are workable concepts.

Remote work: Before the pandemic, work-from-home as a concept was still taking baby steps. The CEOs were mostly sceptical about it. But COVID-19 has demonstrated that it is not only workable but also brings benefits to the employers in the form of cost savings on office maintenance. At the same time, it has also divided the employees among haves and have-nots. It is not possible for many to work from home as the nature of their work requires physical presence at the office.

E-commerce: Lockdowns meant no visits to markets and malls. As a result, e-commerce portals witnessed record traffic. Going forward, a big chunk of this increased traffic will become permanent. Same holds true for fintech.

Public transport: With the social distancing norms in force, public transport has taken a major hit. If the pandemic prolongs, there is a risk of people permanently shifting to personal vehicles and, therefore, increasing pollution and traffic congestion.

Real estate: With work-from-home taking roots, both residential and office property values in big cities will fall. Companies will opt for smaller offices while employees will prefer suburbs and small towns where property prices are lower.

COVID-19 Week 52 Update

Even as the COVID-19 vaccine distribution drive gathers steam in different parts of the world, a new ‘super-spreader’ strain of the virus has been detected in the UK. According to the country’s government, this new strain is up to 70% more infectious but there is no evidence to suggest that it is more deadly. Following the UK government’s statement, several countries stepped up testing of air passengers arriving from the UK and have already detected a few cases of the new strain.

A study by the Centre for Mathematical Modelling of Infectious Diseases, London School of Hygiene and Tropical Medicine, says the new strain is 56% more transmissible than other strains. “Nevertheless, the increase in transmissibility is likely to lead to a large increase in incidence, with COVID-19 hospitalisations and deaths projected to reach higher levels in 2021 than were observed in 2020, even if regional tiered restrictions implemented before December 19 are maintained,” the study adds. The authors of the study further warn that measures like the national lockdown imposed in England in November are unlikely to reduce infections unless schools and universities are also closed. “We project that large resurgences of the virus are likely to occur following easing of control measures. It may be necessary to greatly accelerate vaccine rollout to have an appreciable impact in suppressing the resulting disease burden,” the authors add.

From the COVID economy this week, Counterpoint expects that the global laptop market will hit a high in 2020, increasing 9% YoY to reach 173 million units. With uncertainty persisting over COVID-19, work-from-home and study-from-home will likely continue into 2021 and some part of 2022. Therefore, we expect the global laptop shipments to continue to grow slightly in 2021 and 2022. After reaching its peak in 2011, the laptop market growth had slowed down with the rise of alternatives such as smartphones and tablets.

COVID-19 Week 51 Update

With the developed countries beginning to roll out COVID-19 vaccines, the focus has now shifted to the developing countries and the challenges faced by them in procuring and distributing vaccines. Consider this: In the US, Pfizer’s vaccine costs $19.5 per dose while Moderna’s vaccine is expected to come at $37 per dose. In addition, these vaccines require procurement of special storage boxes. For a developing country, these costs are unaffordable, something which multilateral bodies are now discussing to find a way out.
The World Health Organization (WHO), in alliance with GAVI, plans to provide vaccines and diagnostic kits to economically weak countries through the Access to COVID-19 Tools (ACT) Accelerator fund. However, there is a big funding gap of $28 billion that needs to be filled. The WHO is now considering financial instruments like concessional loans and catastrophe bonds to meet the urgent demand. At the same time, the WHO says it is in talks with Pfizer to make its vaccine a part of the multilateral body’s global rollout and bring down the price to match the budgets of poor countries.
In the meantime, a Reuters report says, the European Union (EU) is considering donating 5% of the COVID-19 vaccines it has secured to poorer nations.
The Asian Development Bank (ADB) has launched a $9-billion facility to help countries fund purchase and distribution of COVID-19 vaccines.
The Inter-American Development Bank (IDB) says it will mobilize $1 billion to help the Latin American and Caribbean countries acquire and distribute COVID-19 vaccines. This is in addition to around $1.2 billion already committed in 2020.
Among countries, Canada has promised to spend $380 million on COVID-19 tests, treatments and vaccines in low- and middle-income countries through the United Nations International Children’s Emergency Fund (UNICEF).

COVID-19 Week 50 Update

As nations begin rolling out mass vaccination drives to fight the COVID-19 pandemic, fresh issues are cropping up, highlighting the challenges associated with administering a vaccine at such a large scale.

The UK started its mass vaccination drive on Tuesday, and soon the country’s Medicines and Healthcare Products Regulatory Agency was forced to issue an advisory that those having a history of anaphylaxis (an extreme allergic reaction) to some medicines or food should not get Pfizer’s COVID-19 vaccine.

In the US, highlighting the supply chain challenges being faced by the vaccination drive, Pfizer has slashed its COVID-19 vaccine production target for this year by half to 50 million doses. The decision was taken after some batches of the vaccine raw material failed to meet the standards.

Transportation of a COVID-19 vaccine like the one from Pfizer, which needs to be stored at minus 70 degrees Celsius, means having sufficient supplies of dry ice. But reports say officials in the rural areas of the US are not sure about the country’s dry ice production capacity to meet this spurt in demand. One can easily imagine the situation in a developing country with poor infrastructure.

Hackers, too, seem to be having a field day if Pfizer and its German partner BioNTech are to be believed. In a statement on Wednesday, the two companies claimed that documents related to their COVID-19 vaccine had been “unlawfully accessed” in a cyberattack on the European Medicines Agency, the EU body which assesses medicines and vaccines.

From the Covid economy this week, food delivery company DoorDash debuted at the NYSE on Wednesday with a gain of 80%, taking its value to around $71 billion.

COVID-19 Week 49 Update

Britain has become the first country in the West to approve a COVID-19 vaccine shot. Announcing the approval for Pfizer’s vaccine on Wednesday, the government described it as a ray of hope amid the surrounding gloom. It has already ordered doses for 20 million people against the country’s total population of around 67 million. Care home staff and residents will be the first ones to get the vaccine, followed by healthcare workers and the elderly. People will be contacted directly when their turn to get vaccinated comes. The main challenge with rolling out the vaccine is the requirement to keep it at around -80 degrees centigrade. This requirement will make it difficult to use the vaccine in countries with poor logistics infrastructure. Meanwhile, the UK government has also asked the country’s regulator to assess AstraZeneca’s vaccine for rollout, even as experts raise doubts over the trial data.

The World Health Organization (WHO) said on Wednesday it was reviewing the Pfizer vaccine trial data for “possible listing for emergency use” so that other nations could authorize the vaccine for national use. Pfizer has also approached the EU for a regulatory clearance, which is expected to come this month itself. However, the WHO believes that the world will not have sufficient quantities of vaccines in the next three to six months to prevent a surge in infections.

From the Covid-triggered economy this week, Salesforce is buying workplace messaging app Slack for $27.7 billion, betting on work-from-home outlasting the pandemic and the company getting into a better position to take on Microsoft. Slack has not been able to make the most of the opportunity presented by the pandemic.

COVID19 Dashboard by the CSSE at JHU - Week 49

COVID-19 Week 48 Update

The total number of COVID-19 cases in the world crossed the 60 million mark on Wednesday with the US (13,138,204 cases), India (9,266,697) and Brazil (6,166,898) continuing to be the top three most affected countries. In terms of daily new cases, apart from these three countries, rest all in the global top 10 belong to Europe, with Italy (25,853 daily new cases), Russia (23,675) and Germany (20,825) taking the top three slots for the continent.  When it comes to daily new deaths, the picture changes considerably. The US continues to top here with 2,304 deaths, but is followed by Mexico (813), Italy (722), UK (696) and Poland (674).

While the recent announcements by Pfizer, Moderna and AstraZeneca-Oxford on successful completion of their vaccine trials have raised hopes everywhere, it is the poor countries which run the risk of getting the vaccine horrendously late and thus suffering avoidable calamities. The World Health Organization (WHO) said on Monday that $4.3 billion more was needed for its global vaccine programme, which has raised $5 billion so far.

Dell continues to benefit from work-from-home and study-from-home with the soaring demand for its PCs and laptops giving the company a surprise 3% rise in Q3 revenue. Dell says it has not seen for over a decade the kind of demand it is seeing for its notebooks now.

Another sector that is emerging due to the pandemic is telemedicine. The sector is seeing an intense merger and acquisition activity, the latest being the merger of UpHealth Holdings Inc, Cloudbreak Health LLC and GigCapital2 Inc to create a $1.35-billion digital healthcare company.

COVID19 Dashboard by the CSSE at JHU - Week 48

COVID-19 Week 47 Update

The race for a COVID-19 vaccine is set to touch the finish line next month with the first batch of recipients getting the dose in December itself, thanks to the vaccine frontrunners starting production of their candidates before receiving the final approval.

Moderna announced on Monday that its vaccine candidate had been found to be 94.5% effective in preventing COVID-19 in a late-stage trial. Similarly, Pfizer said on Wednesday its candidate had been found to be 95% effective. The World Health Organization (WHO) demands at least 70% efficacy while the US Food and Drug Administration (USFDA) requires at least 50%.

If both Pfizer and Moderna get the emergency use authorization (EUA) from the US government, they will be in a position to supply around 60 million doses in the country in December this year. According to officials, US states are ready for the distribution at a 24-hour notice.

In a related development, USFDA said on Tuesday it had approved a COVID-19 self-testing kit that would provide the result within 30 minutes. The kit, produced by Lucira Health, has received the EUA for use by those aged 14 and above.

However, internationally, it is the vaccine candidate being developed by the University of Oxford and AstraZeneca that is inviting more attention due to its size and geographic spread. Here too, AstraZeneca says “billions of doses” of the candidate are already being produced with the late-stage trial data release expected by December.

The COVAX facility, set up by the WHO and the GAVI alliance, has managed to exceed the initial target of raising $2 billion to buy vaccine for poorer countries. The alliance said the collection would allow it to buy one billion doses for 92 countries.

COVID19 Dashboard by the CSSE at JHU - Week 47

COVID-19 Week 46 Update

With its rickety healthcare infrastructure and poor living conditions, Africa was being described as a COVID-19 disaster waiting to happen. But what has happened in reality is just the opposite. Even as the wealthier parts of the world grapple with their second or third waves of coronavirus, Africa has managed to retain the casualty numbers at the lowest levels among big continents. Against the World Health Organization’s (WHO’s) prediction in May that 190,000 people would die in the continent if measures to check the pandemic failed, in all 46,357 deaths had been reported till Wednesday. While experts have pointed out the low levels of testing in Africa as the likely cause of underreporting of deaths, reports from other quarters, including hospitals, have mentioned no unusual spurt in casualties.

There are many factors going in Africa’s favour here. The continent’s relative isolation means that many countries receive very few foreign visitors or send people abroad. A case in point is South Africa, which is among the African countries recording maximum interaction with the outside world, and also leads the table in total deaths related to COVID-19. Africa’s relative isolation also meant that the continent was hit by the virus late and countries got time to prepare themselves for the outbreak.

The other reason is the continent’s young population. According to the United Nations (UN), as much as three-quarters of Africa’s population is aged below 35. COVID-19 is known to have more adverse impact on older population and those with comorbidities.

The continent has also gone through other outbreaks like Ebola in the recent past to prepare for the current pandemic to some extent. Experts are also looking into whether a TB vaccine popular in the continent is helping impart immunity in this case also.

COVID19 Dashboard by the CSSE at JHU - Week 46COVID-19 Week 45 Update

Even as the world awaits the US presidential election result, the country on Thursday reported its highest ever daily new COVID-19 cases at 118,204. In Europe, Denmark has decided to cull around 17 million minks after discovering that a mutation of the coronavirus found in the animal had spread to humans. The country’s prime minister said this particular strain of the virus showed decreased sensitivity against antibodies, which could affect the efficacy of any future vaccine.

COVID19 Dashboard by the CSSE at JHU - Week 45

According to the latest research from Counterpoint’s Market Monitor Service, the global smartphone market grew 32% QoQ to reach 366 million units in Q3 2020. This recovery was driven by key markets like the US, India and Latin America returning slowly to normal due to eased lockdown conditions. The smartphone market has shown resilience to the ill effects of COVID-19 both from the supply and demand side. Samsung regained the top spot, shipping 79.8 million units to register 47% QoQ growth. This is the highest ever shipment by Samsung in the last three years.

PayPal continued to benefit from the surge in digital payments in Q3. However, the company, while beating estimates for Q3, forecast Q4 profit to be below expectations, mainly due to the uncertainty surrounding the pandemic and concerns over the US presidential election outcome. The US-based company processed $247-billion payments in Q3, an increase of 36% from the year-ago period, and added 15.2 million new active users.

Japan-based gaming company Nintendo has revised the forecast for its operating profit by 50% to $4.31 billion as it expects to sell 24 million Switch gaming consoles in the year ending March 2021, up from the previous forecast of 19 million.

COVID-19 Week 44 Update

With the second wave of COVID-19 strengthening its grip on Europe, Germany and France have ordered fresh lockdowns. Germany has decided to impose a month-long lockdown which will see closure of restaurants, theatres, pools and gyms from November 2. France has decided that from October 30, anyone leaving home will have to carry a document justifying the presence outside. On the other hand, the UK is resisting calls for imposing a nationwide lockdown, saying it brings economic hardships.

This chart shows how Europe has become the new epicenter of the virus as the second wave grows
This chart shows how Europe has become the new epicenter of the virus as the second wave grows
While this chart shows how selected individual countries are being impacted
While this chart shows how selected individual countries are being impacted
COVID19 Dashboard by the CSSE at JHU - Week 44
COVID19 Dashboard by the CSSE at JHU – Week 44

On the vaccine front, US’ top infectious diseases expert Anthony Fauci has said the country will get a vaccine only after January next year. Reports in the UK say the government there expects the results from the trials for Pfizer’s candidate would be available before those for AstraZeneca’s candidate, and that the Pfizer vaccine could be available for distribution before Christmas. An assessment by the European Union says the bloc will be able to administer a vaccine to all its inhabitants only by 2022 as the sufficient number of doses won’t be available till then.

From the COVID-triggered economy this week, Azure, Microsoft’s cloud computing business, has reported a 48% rise in its revenue for the latest quarter. Teams software continues to attract new users even as the demand for Windows for laptops and Xbox gaming services soars.

Sony has registered a record Q2 profit, convincing it to raise its outlook for the annual profit. The company’s gaming business continues to perform well before the launch of the PlayStation 5 (PS5) console next month.

Capgemini has reported an 18.4% increase in its Q3 revenue at $4.74 billion on good show by its digital and cloud offerings, which now bring more than half of the French company’s business.

COVID-19 Week 43 Update

Even as the total number of COVID-19 cases globally crossed the 41-million mark this week, with daily new cases hitting fresh peaks in Europe, the World Health Organization (WHO) came out with a study that said remdesivir, hydroxychloroquine, lopinavir and interferon were not effective in treating coronavirus. These are among the handful of drugs being used for the treatment. Interim trials by the WHO under its Solidarity Trial programme suggest these drugs are ineffective in reducing hospital stays and death risk. More than 11,000 adults with COVID-19 in around 30 countries participated in the trial. Reacting to the trial findings, Gilead, which produces remdesivir, said other studies had showed the efficacy of remdesivir. Besides, the US company said, there were differences in the way the WHO trial was conducted at different locations. Following the trial findings, the WHO announced that the Solidarity Trial would now cover monoclonal antibodies and other antiviral drugs.

On the vaccine front, Pfizer has said it could file for US authorization of its COVID-19 vaccine candidate in late November. This means there is a possibility of the company’s vaccine becoming available in the US this year itself. Pfizer is developing the vaccine with German partner BioNTech.

From the COVID economy this week, a World Economic Forum (WEF) study says that the pandemic has accelerated the shift towards automation in industries. Robots may end up destroying 85 million jobs over the next five years, the study warns.

Technology companies benefitting from work-from-home and study-from-home continue to report good numbers. US’ Verizon Communications beat third quarter profit estimates on Wednesday. Operating revenue fell 4.1% to $31.54 billion. Net income fell to $4.50 billion from $5.34 billion a year ago. The company has raised its adjusted EPS growth range guidance for 2020 from -2%–2% to 0%–2%.

Cyber security firm McAfee has raised $620 million in its US IPO. The IPO values the company at $8.6 billion. In 2016, TPG had bought a majority stake in McAfee from Intel in a deal that valued the company at $4.2 billion after including debt.

Taiwan Semiconductor Manufacturing Co (TSMC) has reported a record net profit of $4.8 billion in the July-September quarter, an increase of 36%. The company is betting big on the projected demand for the next two years. It has also raised its revenue forecast for 2020 from more than 20% increase to more than 30% jump now.

On the other hand, the boom triggered by the virus seems to be over for Netflix. On Tuesday, the company reported its weakest subscriber additions in four years, mainly due to lifting of pandemic restrictions during Q3. In the quarter, Netflix added 2.2 million paid subscribers, missing analysts’ and own forecasts.

COVID-19 Week 42 Update

The second wave of COVID-19 is turning out to be more destructive in Europe, with the top five countries in terms of total number of cases — Russia (1,354,163), Spain (937,311), France (779,063), UK (654,644) and Italy (372,799) — reporting record daily new cases during the last month. As a result, lockdowns and shutdowns are back in many countries. France has announced night curfews in its major cities, including Paris, while Germany and Italy have ordered midnight closure of bars and restaurants. The UK is applying three levels of restrictions depending on the prevalence of the virus at a regional level. However, even at its highest level, it is still not as strict a lockdown as seen in March and April.

COVID19 Dashboard by the CSSE at JHU - Week 42

On the vaccine front, Johnson & Johnson said on Tuesday it was pausing its vaccine trial after a participant developed some unexplained illness. A panel will study the case before deciding on the trial restart. Similarly, Eli Lilly and Co said on Tuesday the US government had paused its trial for an antibody treatment following safety concerns.

China has joined a World Health Organization (WHO)-backed vaccine distribution programme COVAX. The country is planning to buy vaccines for 1% of its population (around 15 million) through this programme. Norway has announced that it will offer a COVID-19 vaccine free of charge to its citizens while making it a part of the country’s vaccination programme.

From the COVID-triggered economy this week, Walt Disney Co said on Monday it had restructured its media and entertainment units to push growth of streaming services like Disney+. Under the new structure, production and distribution of programming will form two different units.

Amazon finally managed to organize its Prime Day event in the US on October 13-14. The event is usually held in July but was postponed due to the pandemic. Rivals like Walmart, Best Buy and Target have also launched their competing sales, keeping in mind the reduced footfalls at their stores due to COVID-19.

A survey by Cisco says that as many as nine out of 10 employees want to retain the option of working from home after the COVID-19 restrictions are lifted.

COVID-19 Week 41 Update

Ten months into the COVID-19 pandemic, around 10% of the total global population of 7.8 billion has been infected by the virus, according to the World Health Organization (WHO). On Thursday, estimates based on the official data put the total cases globally at just over 36 million (around 0.5% of the global population). “Our current best estimates tell us that about 10% of the global population may have been infected by this virus. It varies depending on the country, it varies from urban to rural, it varies between different groups. But what it does mean is that the vast majority of the world remains at risk,” said WHO expert Mike Ryan.

COVID19 Dashboard by the CSSE at JHU - Week 41

On the vaccine front, WHO Director-General Tedros Adhanom Ghebreyesus said on Tuesday there was hope that by the end of this year “we may have a vaccine”. According to another WHO official, China is in talks with the global body to make available its vaccines for international use. Reports in the UK say AstraZeneca and Oxford University’s vaccine candidate could see a mass rollout in the country in three months and cover all adults within six months. The European Medicines Agency said it was reviewing in real time the data from the trials for the AstraZeneca and Oxford University’s, and Pfizer and BioNTech’s vaccine candidates to speed up the approval process. In the US, Regeneron Pharmaceuticals and Eli Lilly have applied for emergency use of their antibody treatments following encouraging results.

From the COVID economy this week, streaming service provider fuboTV raised $183 million through an initial public offering. The US-based company is now valued at over $620 million. It had 286,126 paid subscribers in Q2, an increase of 47% YoY.

Levi Strauss on Tuesday reported 52% growth in its online sales in Q3, beating expectations and giving the company a surprise profit. On the other hand, the world’s second largest fashion retailer, H&M, said on Thursday that it was planning to close around 250 of its stores as shoppers were increasingly shifting to online channels.

COVID-19 Week 40 Update

One in 15 people aged above 10 in India had been exposed to COVID-19 by August, according to the latest sero-survey conducted by the Indian Council of Medical Research (ICMR). Such surveys involve testing of blood serum of a section of the population. Further, the survey says 7.1% of the adult population, aged above 18, showed evidence of past exposure to the virus. This is a big jump over the 0.73% reported in the previous sero-survey. India’s total population is estimated at 1.3 billion. Going by the latest ICMR survey, over 60 million people in India may have been infected by the virus, which is almost double the number for the whole world. On Wednesday, the total number of COVID-19 cases in the country were put at 6,310,267 based on officially available data. India is only second after the US (7,447,282) globally in total number of cases.

COVID19 Dashboard by the CSSE at JHU - Week 40.jpg

Even as the number of cases continue to rise in India, it has announced further easing of curbs on certain activities from October 15. These include educational institutions, cinema halls, multiplexes, holding of certain exhibitions, swimming pools and social gatherings having more than 100 people.

The World Health Organization (WHO) said on Wednesday it felt that the number of deaths globally were higher than what was being officially reported. A WHO official said thousands more were “fighting for their lives in hospitals all over the world”.

On the vaccine front, Moderna has said it would not be in a position to seek emergency authorization for its COVID-19 vaccine candidate before November 25, a Financial Times report said quoting the company’s CEO. In Europe, the regulators are planning an accelerated review of AstraZeneca’s COVID-19 vaccine candidate, even as they cleared Becton Dickinson & Co’s 15-minute test to detect the virus.

From the COVID economy this week, SoftBank’s robotics unit has said it would bring a robot named Servi, developed by US-based Bear Robotics, to Japan to help restaurants grapple with labour shortage and social-distancing norms. To be launched in January, the robot will cost 99,800 yen ($950) per month, excluding taxes, for a three-year plan.

COVID-19 Week 39 Update

A second wave of COVID-19 has tightened its grip on key economies like Russia, Canada, UK, Germany, France and Spain. The global financial markets took note of this and got into a correction mode this week. In Europe, the second wave is being driven by younger generations – especially after schools reopened in September. However, most youngsters suffer modest symptoms. The concern is more for older populations. And it is among this group that hospitalizations are now also beginning to escalate.

In Canada, Prime Minister Justin Trudeau said in a national address that the country was “on the brink of a fall that could be much worse than the spring”.

Strong second waves of infections emerging in France and Spain. Argentina now the most impacted market in Latin America.

14 Day Cumulative Cases per 100k Population - Week 39
Data Source: European Centre for Disease Control and Prevention and Control


After a slight dip in August, daily infections are reaching new highs

Sum of New Daily Cases by Continent Since March 1st - Week 39
Data Source: European Centre for Disease Control and Prevention and Control

A study by Houston Methodist Hospital says that a more contagious strain of COVID-19 dominates in the second wave of the virus in Houston, Texas. As many as 5,085 genomes from virus samples recovered during the two waves of the pandemic were examined as part of the study that is yet to be peer-reviewed.

The UK is expected to commence challenge trials of a vaccine, likely in January. These trials will vaccinate healthy young volunteers and then dose them with the virus to observe what happens. This is a key step in isolating an effective vaccine.

The International Monetary Fund (IMF) said on Wednesday that the virus had lasted longer than expected and it would take some countries’ economies a few years to recover from the pandemic. The European Commission on Friday asked its members to increase the pace of rollout of fibre and 5G networks to help revive the region’s virus-hit economy and secure its “technological autonomy”. The Commission further said: “The Commission invites member states to come together to develop, by March 30, 2021, a common approach, in the form of a toolbox of best practices, for the timely rollout of fixed and mobile very high-capacity networks, including 5G networks.”

From the COVID economy this week, Microsoft on Monday announced that it would acquire ZeniMax Media for $7.5 billion, adding popular game franchises like Doom, Fallout and Dishonored to its Xbox offering. Microsoft said it was planning to offer future games from Bethesda, which is a ZeniMax Media unit, as part of its monthly Xbox Game Pass subscription service.

Zero-fee stock trading app Robinhood, often credited with popularizing stock trading among stuck-at-home millennials, has raised an additional $460 million as part of its Series G fund-raising round. In August, it had raised $200 million as part of the same round. Now the company is valued at over $11.7 billion.

Shares of online prescription drug platform GoodRx Holdings surged 40% at their Nasdaq debut on Wednesday. The company has raised $1.14 billion through its initial public offering.

COVID19 Dashboard by the CSSE at JHU - Week 39

COVID-19 Week 38 Update

Global coronavirus cases crossed the 30 million mark this week, with the epicentre gradually shifting to India. The country’s total number of officially reported cases is expected to cross that of the US next month if current rates of increase persist. Many hospitals in the worst affected regions of India have already started reporting oxygen shortages.

The World Health Organization (WHO) said on Wednesday that worrying trends were visible in some countries before the approaching onset of winter influenza season, with hospitalisations increasing “particularly in Spain, France, Montenegro, Ukraine and some states of the US”. The WHO has asked people who fall in the high-risk category for COVID-19 to get themselves vaccinated against flu.

The chart below shows that France and, especially, Spain are experiencing stronger second waves of infection than in the spring.

14 Day Cumulative Cases Per 100K Population

The race for a COVID-19 vaccine has intensified with over 150 candidates in the fray globally. AstraZeneca, which had halted its global trial for a vaccine being developed along with Oxford University after a subject in the UK reported some illness, on Saturday announced resumption of the trial following clearances from safety watchdogs. Supported by the Trump administration, many companies in the US have already started mass production of some vaccine candidates in the hope that one of them will clear the required trials. Reports say plans are being finalised to ship the vaccines within a day of getting the regulatory clearance.

Russia and China’s efforts for a vaccine, though low on support from the global medical fraternity, are claimed to have produced positive results. Both the countries have tied up with other countries for manufacture or distribution of their vaccines.

From the COVID economy this week, data warehousing company Snowflake made a stellar debut in the stock market on Wednesday, more than doubling its IPO price of $120 per share. The Warren Buffett-backed company has raised more than $3 billion in the largest US listing this year so far.

With its cloud business booming, Oracle has reported 1.6% increase in its total Q1 revenue to $9.37 billion, beating estimates. The company’s unit that also houses its cloud business reported 2.1% increase in revenue to $6.95 billion.

Amazon has announced that it will hire 100,000 more workers for full and part-time roles in the US and Canada this year to meet the spurt in demand due to the pandemic. In addition, it is also opening as many as 100 new warehouses and operations sites.

COVID-19 Week 37 Update

Following the expected trajectory, India on Monday overtook Brazil as the country with second highest number of total COVID-19 cases. On Wednesday, India reported 95,529 daily new cases, taking the total to 4,462,965, against Brazil’s 34,208 daily new cases and 4,199,332 total cases. However, in total deaths, India is at third position with 75,091 deaths till Wednesday against Brazil’s 128,653.

What is more worrying is that India’s cases are rising steadily with the peak nowhere in sight. Add to this the rickety health infrastructure and densely populated areas with poor hygiene, and you have a big disaster waiting to happen.

COVID-19 Dashboard by CSSE at JHU - Week 37 UpdateIn the race to find a vaccine for COVID-19, two of the front-runners had some discouraging news this week. On Tuesday, AstraZeneca announced that it had halted its global trial for a vaccine being developed along with Oxford University after a subject in the UK reported some illness. An independent panel will now go through the clinical trial data before giving a go-ahead to restart the trial. On Friday, Moderna said it had asked its teams to enrol more members from the minority communities for the clinical trials for its vaccine candidate, even if that meant delaying the trials.

Commenting on the AstraZeneca trial suspension, the World Health Organization (WHO) was reported to have said such suspensions were not uncommon and that the safety of subjects was most important. Meanwhile, in an unusual move, leading vaccine developers in the US and Europe on Tuesday pledged that they won’t bow to any pressure to rush through their trials and would follow all safety and efficacy standards. AstraZeneca and Moderna participated in the pledge. All these companies were further buttressed by the US National Institutes of Health chief, who told a congressional hearing on Wednesday that there was no way to tell if a safe vaccine would be available before the November 3 presidential election, thus contradicting President Donald Trump.

COVID-19 continues to affect the technology companies in different ways. On Tuesday, Apple announced that its annual event on September 15 would go virtual for the first time. Apple usually showcases its most important products in these events, but this time around expectations are that new versions of iPhone will miss the September 15 date.

COVID-19 Week 36 Update

As testing is stepped up in India, a true picture of the spread of COVID-19 pandemic in the country is emerging. And the news is certainly not good. On Sunday, India reported the biggest single day rise in coronavirus cases anywhere in the world so far. As against the previous record of 78,619 cases in the US on July 24, India reported 79,457 cases on August 30. Among the top three countries in terms of total number of cases, the top two — the US and Brazil — are now on a downward trajectory when it comes to daily new cases.

COVID-19 Dashboard by CSSE at JHU - Week 36 Update.jpgIn the US, the White House has rejected the World Health Organization’s (WHO’s) concerns over the move to introduce a COVID-19 vaccine in the country without completing the Phase III clinical trials. A White House spokesman said the president would spare no expense to ensure that “any new vaccine maintains our own FDA’s gold standard for safety and efficacy”. Calling the WHO “corrupt”, the spokesman said the US would not join any effort led by the multilateral organization to develop and manufacture a vaccine. Meanwhile, the US Centers for Disease Control and Prevention (CDC) has reportedly asked all states to start preparations for distribution of a vaccine among high-risk categories beginning late October.

Even as efforts are on to have a vaccine as soon as possible, existing medicines continue to get a chance to prove their efficacy. An analysis of results from seven separate global trials has revealed that steroids can lead to survival of 68% of the sickest COVID-19 patients compared to around 60% in case of those not taking steroids. Following these results, the WHO has updated its advice to include a “strong recommendation” for use of steroids in seriously ill patients.

Technology companies are also doing their bit in the fight against COVID-19. Google and Apple have come out with a new system, Exposure Notifications Express, which makes it possible for health officials to use smartphones for contact tracing without needing an app. Under the system, officials have to submit a configuration file to Google and Apple, which then use it to set up a functionality that phone users can opt for to determine their possible proximity to any person testing positive for COVID-19.



COVID-19 Week 35 Update

Even as the COVID-19 cases crossed the 24-million mark globally this week, countries which had seen a spurt in cases during the initial phase of the pandemic are reporting fresh spikes. On Wednesday, Italy reported 1,367 new cases, highest in three-and-a-half months. The fresh wave in the country is being blamed on the citizens returning from vacations. South Korea reported 441 new cases on Wednesday, which is the most since March, while France reported 5,429 cases on the same day, the most since mid-April.

Counterpoint COVID-19 Dashboard by CSSE at JHU - Week 35 UpdateMore distressing news came from Hong Kong on Monday, where researchers reported the first documented case of coronavirus re-infection. A man who had recovered from COVID-19 got infected again by a different strain after four-and-a-half months, according to the University of Hong Kong experts.

In the US, the Centers for Disease Control and Prevention (CDC) has triggered a big controversy by stating that asymptomatic people may not need to be tested. Experts and politicians have slammed the move, with many saying it is politically motivated. National Institute of Allergy and Infectious Diseases director, Anthony Fauci, is reported to be concerned over the guidance. He fears people would be misled into believing that asymptomatic cases are not of great concern.

In the COVID-spurred economy this week, Salesforce on Tuesday reported a 29% jump in its Q2 revenue to $5.15 billion, beating estimates. Good demand for its software for remote work has convinced the company to raise its 2021 revenue forecast to $20.7 billion-$20.8 billion from $20 billion.

Box Inc on Wednesday said its Q2 revenue increased 11.4% to $192.3 million, beating estimates, on more customers for its online services for content management and storage, and for data security products.

According to a KPMG survey, 80% of business leaders have accelerated their digital expansion plans, with 69% saying they are planning to reduce their office space in the short term.

UK’s largest supermarket Tesco on Monday said it would create 16,000 new permanent jobs to service its growing online business.

COVID-19 Week 34 Update

India is sitting on a COVID bomb if a study by a leading chain of laboratories in the country is to be believed. Antibody tests conducted by Thyrocare across the country show that the virus has infected one in four Indians. This could potentially take the total number of cases in the country to 325 million, much higher than the government estimates.

Concerned over some developed nations reaching deals with companies for vaccine candidates, the World Health Organization (WHO) has lashed out at this ‘vaccine nationalism’ that encourages hoarding and overlooks the interests of developing nations. The global body wants its 194 member countries to join an agreement for a ‘COVAX Global Vaccines Facility’ to share vaccine candidates with developing countries. It has set August 31 as the deadline for joining the pact.

COVID-19 Dashboard by the CSU at JHU - Week 34 COVID-19 UpdateWith the pandemic forcing a tectonic shift in the way we live and work, investors have started betting big on the long-term success of tech companies like Apple. Their stocks and valuations have hit record highs even as the broader economy plumbs new depths.

On Wednesday, Apple became the first listed US company with a $2-trillion stock market value. The company’s shares rose to as high as $468.65, which is equal to a market capitalization of over $2 trillion. The company’s stock has been much in demand following its impressive results for the quarter ended June 27.

Another US company that has seen its valuation rise due to the pandemic is fintech start-up Robinhood Markets. The company, which has contributed to the surge in day trading among stuck-at-home millennials, has raised $200 million from D1 Capital Partners at a valuation of $11.2 billion in the latest funding round.

The pandemic may have hit hard Airbnb’s main business, but it can’t stop the company from betting big on future and bringing an IPO. Airbnb on Wednesday confidentially filed for an IPO with the SEC, with the details like the number of shares on offer and the price range yet to be worked out.

In Finland, Rovio Entertainment, known for its Angry Birds game series, has reported a 160% jump in its Q2 adjusted operating profit at euro 13.8 million on surge in demand due to the COVID-19 lockdowns.

COVID-19 Week 33 Update

India’s ballooning COVID-19 cases continue to bring worry to health officials and policymakers. Though the country stands third globally after the US and Brazil in terms of total number of cases, it has been leading in daily new cases since August 4, with the graph following a definite rising trajectory. On Wednesday, India reported 61,252 daily new cases, compared to 54,519 in the US and 54,923 in Brazil.

COVID-19 Dashboard by the CSU at JHU - Week 33 COVID-19 Update

However, the biggest news this week on the COVID-19 front came from Russia on Tuesday when President Vladimir Putin announced that his country had become the first one to approve a COVID-19 vaccine after testing it on humans for less than two months. Named ‘Sputnik V’ after the world’s first satellite, which was launched by the erstwhile Soviet Union, the vaccine is expected to enter mass production by this year-end. But experts the world over have raised an alarm over Russia’s claims on the vaccine, saying in the absence of proper data and large-scale trials the vaccine’s efficacy cannot be trusted. Russian health minister Mikhail Murashko has dubbed these concerns as “groundless”.

Cisco has reported 9% fall in its revenue to $12.2 billion for the fourth quarter ended July 25. However, it managed to beat estimates on increased demand from the work-from-home (WFH) segment for its web security and teleconferencing solutions. But the bigger picture is not so rosy for the company. It has forecast its Q1 numbers below estimates and announced a restructuring plan as the pandemic forced its clients to hold back spending.

World’s biggest electronics contract manufacturer and Apple supplier Foxconn has reported a better-than-expected second quarter profit of $778.54 million, with the rising demand from the WFH segment managing to offset sluggish smartphone sales.

The pandemic has hit demand for Toshiba’s electronic devices and chip-making equipment, with the Japanese conglomerate registering its first quarterly operating loss in nearly four years. The company reported an operating loss of $118 million for the June quarter.

China’s gaming and social media major Tencent has reported a 37% rise in its second quarter net profit at $4.8 billion, beating estimates. Though the COVID-19 pandemic hit its other entertainment businesses, it pushed the demand for the company’s video games.


COVID-19 Week 32 Update

The total number of deaths due to the COVID-19 pandemic crossed the 700,000 mark on Wednesday with the US alone accounting for more than 160,000 deaths. However, in terms of fresh daily deaths, Brazil (1,322) nudged past the US (1,311) on Wednesday. In daily new cases, India took the top slot with 56,626 cases. However the US data is becoming increasingly dubious following the US administration’s insistence on taking over some aspects of data reporting from the US CDC.

New Daily Cases by Country Since March 1st - COVID-19 Week 32 UpdateA big casualty of COVID-19 has been the education of children the world over. On Tuesday, United Nations (UN) Secretary-General Antonio Guterres warned that the world was facing a “generational catastrophe” due to shutting down of schools. According to UN calculations, schools remained closed in around 160 countries in mid-July, impacting more than 1 billion students, with around 40 million missing out on pre-school. This is accentuating the digital divide where relatively affluent children can often use PCs, tablets or smartphones to reach online learning resources, but many in families with marginal incomes cannot.

From the COVID-created economy this week, Teladoc Health announced on Wednesday that it would buy chronic care provider Livongo Health in a $18.5-billion deal, spurred by the boom in online medical care due to coronavirus.

Sony reported a marginal 1.1% fall in profit for the June quarter, surprising markets and analysts. The company registered a profit of around $2.15 billion riding the demand for its gaming products, which managed to neutralize the impact of profit drop in other business segments.

Another Japanese major, Nintendo, has reported an operating profit of $1.37 billion for the June quarter on the soaring demand for its Switch device and popular title ‘Animal Crossing: New Horizons’.

On the other hand, Japan’s Sharp reported 38% drop in its June-quarter operating profit at $85.2 million, beating analyst estimates. The pandemic has affected its sales of electronic devices and office printers.

Many other companies have reported earnings with several high profile component players reporting slightly better results than they expected. They continue to expect the 2H to be down slightly (c5% Y/Y) with smartphones and compute a bit better due to WFH/distance learning. But automotive likely a bit worse. Macro conditions cloud the perspective as the full impacts on unemployment are not yet visible due to job retention/furlough schemes that are beginning to wind down in some countries, leading companies to make people redundant in increasing numbers.

COVID-19 seems to have shown the way forward to the newspaper industry. The New York Times’ revenues from its digital business overtook that of the legacy print segment in the second quarter for the first time in its history.

COVID-19 Week 31 Update

COVID-19 has tightened its grip across countries with the total number of cases crossing the grim milestone of 17 million. It took just three days for the cases to rise from 16 million to 17 million.

Sum of New Daily Cases by Continents Since March 1st - COVID19 Update - Week 31In another grim figure, COVID-19 deaths in the US crossed the 150,000 mark this week. This is around quarter of the global number and higher than any other country. Meanwhile, President Donald Trump’s security adviser Robert O’Brien has tested positive for the virus, becoming the country’s highest-ranking official to test positive so far.

However, official statistics for the US have come into doubt now that the White House has effectively taken over reporting data from the CDC. US data was always complex due to multiple agencies across the states having a hand in compiling the statistics. However, there is now the shadow of political interference to further muddy the water.

In India, after last week’s surveillance study report which implied at least 6.6 million cases in Delhi, India’s most populous city, a similar report came this week for Mumbai, the second most populous city. According to the report, around half of the population in city’s slums is carrying the virus. To understand the scale here, Mumbai has a total population of around 12 million with 65% of it living in slums.

14 Day Cumulative Cases per 100000 population - COVID19 Update - Week 31This grim picture of galloping cases and no concrete cure has forced Google to extend work-from-home (WFH) for its employees till June next year. Others are expected to follow suit. The company was planning to reopen its offices globally in June. Similarly, the world’s biggest technology and gadget show CES, which is held in Las Vegas every January, will be online-only next year, the Consumer Technology Association has decided.

Samsung’s operating profit increased 23% in Q2 on good sales of DRAM memory chips to online providers. The company’s chip arm’s operating profit soared around 60%. Samsung forecasts that the global demand for smartphones and consumer electronics will recover in the second half of the year.

The COVID-19 lockdowns did hit Verizon’s store sales in Q2, but they also pushed the demand for the company’s internet services, adding more phone subscribers. As a result, the fall in total operating revenue was contained at 5.1%.

Music and video streaming apps have been among the biggest beneficiaries of the COVID-imposed lockdowns. But the spurt in subscribers didn’t help much in pushing up Spotify’s Q2 numbers. Reason: The pandemic also kept the advertisers away! Revenue from advertisements fell over 20% during the quarter.

However, this was not the case with online payments processor PayPal. The company reported an 86% increase in its Q2 profit. It processed $222 billion over the quarter, which is 30% more than the same period last year.

COVID-19 Week 30 Update

COVID-19 cases crossed the 15-million mark globally this week, with South Africa replacing Peru among the top five worst affected countries.

COVID-19 Dashboard by the Center for Systems Science and Engineering (CSSE) at JHU - Week 30 COVID-19 UpdateBrazil reported a record number of daily new cases on July 23 at 67,860. The World Health Organization (WHO) had on Friday predicted a plateauing of the country’s graph. Meanwhile, Brazil President Jair Bolsonaro on Wednesday tested positive for the third time since July 7, when he was forced to go into self-isolation at his official residence. Bolsonaro had been opposing measures to curb the pandemic, including wearing of face masks.

India also reported a record number of new cases on the same day, at 45,720. However, new research suggests that almost a quarter of Delhi’s 29 million residents may have had COVID-19. Among a random sample of 20,000 Delhi residents, antibodies were found in 23.5% of the tests. This would imply at least 6.6 million cases in the city – vastly more than the official 124,000 cases.

The number of cases in the US continue to accelerate. They are likely to surpass the 4-million mark by Friday, meaning it will have taken just 16 days to add a million cases; the previous million took 27 days. Only Chile has more official cases per capita than the US.

Daily New Cases by Selected Country - Week 30 COVID-19 updateLooked at by continent, the Americas continue to dominate the viral outbreak picture. Asia is also rising fast – with much of this being accounted for by India. Africa seems relatively unaffected, but the data from South Africa points to the likely level of infections being much higher than officially reported. South Africa had 60% more deaths from “natural causes” than normal, indicating that many of these could have been related to COVID-19, which would imply a much higher number than that officially reported.

Sum of New Daily Cases by Continent - Week 30 COVID-19 UpdateAs was being predicted in media reports, The Lancet on Monday reported positive results from the trials conducted by AstraZeneca and Oxford University for a vaccine candidate. Called AZD1222, the vaccine was able to produce an immune response in early-stage trials. The WHO had earlier described it as the leading candidate for a vaccine. However, on Wednesday, the global body added a note of caution, saying the world would have to wait till early 2021 for any vaccine to hit the market.

COVID-19 continues to impact the balance sheets of technology companies. On Wednesday, Microsoft reported 13% increase in its fourth quarter revenue at $38 billion. This increase came on the back of 14% rise in revenue from the sale of its products for PCs and Xboxes. Similarly, the company’s cloud computing arm, Azure, reported around 50% jump in sales, pushing the overall revenue of Microsoft’s Intelligent Cloud segment by 17% to $13.4 billion. On the other hand, COVID-19 negatively impacted Microsoft’s professional networking site LinkedIn’s numbers, thanks to a weak job market.

International Business Machines (IBM), a Microsoft rival, on Monday reported that revenues at its cloud business increased 30% to $6.3 billion in the second quarter.

Logitech International said on Monday its non-GAAP operating income had increased by over 75% in its first quarter, riding on the rising demand for video conferencing products, webcams and headsets.

On the deal street, Norway’s Adevinta will buy eBay’s classified ads business for $9.2 billion, betting on increased traffic at digital marketplaces.

COVID-19 Update Week 29

Among the top five countries by total number of COVID-19 cases, three — Brazil, Russia and Peru — have followed a downward or plateauing graph for daily new cases, for the past couple of weeks (see chart). But in the case of Brazil (daily new cases at 39,705 on July 15) and Peru (3,857), we will have to wait before reaching a certain conclusion, mainly due to inadequate testing in the two Latin American countries. Russia’s graph (6,422) displays a definite downward trajectory after reaching a peak on May 11 (11,656) while the United States (71,750), India (32,682) and Mexico (7,051) continue their journey upwards.

Counterpoint 14 Day Cumulative Cases per 100,000 PopulationTwo pieces of heartening news on the COVID-19 battlefront came last week, with financial markets across the world also acknowledging it. On Tuesday, US-based company Moderna announced that it was planning to start a late-stage clinical trial around July 27 for its vaccine candidate. In its early-stage study, the candidate showed it was safe and managed to provoke immune responses in all the 45 volunteers.

In the other good news, The Lancet reported that it would publish on Monday the Phase I clinical trial data on a COVID-19 vaccine candidate being developed by British-Swedish company AstraZeneca and Oxford University. This candidate has already reached the Phase III trial stage in Brazil. Media reports say the data to be released on Monday will have “positive news”.  World Health Organization (WHO) chief scientist said in June that this vaccine was probably the world’s leading candidate.

In an indication that demand for products like smartphones will take time to return even after recovery from the pandemic is achieved, Counterpoint’s early data for June suggest smartphone sell-in remained depressed in China, down almost 10% YoY. This despite China being largely free from many of the fears and restrictions dogging other global markets. As if to underscore the this anomaly, shipments to other regions including North America and Europe have bounced back to similar or even better levels than a year ago despite more severe and long-lasting restrictions caused by the pandemic. How sustained these will be in the face of growing unease at the situation in North America and renewed flare-ups in parts of Europe, remains to be seen.

Elsewhere in the smartphone market, a Reuters report said on Monday that Foxconn was planning to invest up to $1 billion to expand a factory in southern India where it assembles Apple iPhones. The report lists COVID-19 as one of the reasons for the “shift” from China to India.

The work-from-home (WFH) segment continues to attract corporate attention. India’s Bharti Airtel and Verizon Communications Inc’s BlueJeans have come together to launch a business-focused video conferencing tool. Airtel BlueJeans will be free for three months and store its data in India, according to Bharti Airtel CEO (India and South Asia) Gopal Vittal.

Google said on Wednesday that Gmail’s business customers would now be able to edit documents without leaving the e-mail service. The company has been eyeing for long the segment dominated by Microsoft Office.

With WFH, there is another activity that has increased at some homes due to COVID-19. The United Kingdom saw an unexpected rise in its June inflation, thanks in part to the rising prices of gaming consoles.

COVID-19 Update Week 28

As testing is stepped up in emerging economies and hitherto undetected cases enter the official records, the order is changing in the charts tracking the pandemic. On Monday, India overtook Russia to become the country with the world’s third-highest number of COVID-19 cases at around 700,000. The United States (3,000,000+) and Brazil (1,700,000+) take the first and second spots. Globally, the total cases crossed the 12-million mark on Thursday.

Countepoint daily new cases by selected countries since March 1st, unsmoothened

A study by researchers from the Massachusetts Institute of Technology (MIT) [find here] predicts that India will hit 287,000 cases per day by early 2021 if no vaccine or medicine is developed by then.

A glimmer of hope came from Mumbai’s Dharavi, Asia’s largest slum, on Tuesday when it reported just one fresh case. Though the number went up to three on Wednesday, it goes far to prove that if authorities get going there is no mountain that can’t be scaled.

Elsewhere, US top infectious diseases expert Anthony Fauci has warned that the country is still “knee-deep” in its first wave of infections and that the number of cases had never reached a satisfactory baseline before the current resurgence.

Counterpoint Sum of New Daily Cases by Continent Since March 1stHowever, a starker piece of information came from the World Health Organization (WHO) on Tuesday, which admitted to an “emerging evidence” that COVID-19 could spread by air beyond the two-metre distance that the global body had been asking people to maintain. The WHO is expecting results in around 10 days from the clinical trials it is conducting for possible drugs to be used for treatment of COVID-19 patients.

The weakness in the global economy due to the pandemic is expected to reflect in the Q2 numbers (we could as well call it the ‘Covid quarter’) put out by the companies as the earnings season gets underway. But the companies catering to the work-from-home (WFH) economy that COVID-19 has given rise to are set to beat the trend. On Tuesday, Samsung Electronics forecast a 23% rise in its second-quarter operating profit, thanks to the increasing chip sales to data centres. The good numbers from this segment were able to offset weak demand for Samsung’s other products, like smartphones.

In the Philippines, broadband service provider Converge ICT Solutions on Friday filed for an IPO of around $725 million on the local bourse, riding the increase in demand for broadband from the WFH and e-commerce segments.

In Africa, Loon, an arm of Google’s parent Alphabet, on Wednesday started offering the world’s first commercial 4G internet using balloons to villagers in Kenya’s remote regions. The floating base stations cover about a hundred times the area of a traditional cellphone tower. The company admits it is getting more enquiries about this service from operators and governments ever since the pandemic started.

COVID-19 Update Week 27

The US and Brazil continue to vie for the lead in ‘most daily cases’. While Brazil has been on a steadily increasing trend, the US had seemed to be getting the outbreak under control. This was the case until lockdowns started to be eased in mid-May. In states that had been relatively lightly hit, the virus immediately flared-up, even while previously badly hit areas, like New York, continued to moderate. Now the trend is accelerating and the US is recording new record daily highs. On a weekly granularity that smooths some of the daily fluctuations, the US is now recording an average case count of more than double the level in mid-June.

Sum of new cases - COVID weekly update week 27Brazil is the worst representative of a broader outbreak in Latin America, with most countries in the region suffering significant impacts from the virus.

The International Monetary Fund (IMF) predicts that Latin American economies will suffer most among all global regions; it expects the region’s economy to shrink by 9.4% this year. It’s outlook for 2021 is for only a moderate recovery. Latin America has endured a number of years of below par economic growth, but the only time in recent history that has seen a economic contraction on the level currently being forecast, was in the early 1980s. Then, the convulsions caused by several countries defaulting on their foreign debts, caused widespread political upheavals.

The consequences of the COVID-19 pandemic on the personal finances of individuals across the region will potentially lead to increased anger at the poor handling of the viral outbreak; Jair Bolsonaro in Brazil being the most egregious case. The anger may then lead to changes in leadership, although elections are not due in Brazil and Mexico for several years. Either way, the outlook for the region is bleak. For more detail on Counterpoint’s forecast for the mobile device markets in Latin America, please contact us.

Other countries and regions causing concern include South Africa and India. South Africa, like India, had imposed a strict lockdown. It has now started to ease the restrictions, but the outbreak is responding by showing sharp increases.

India is showing a similar pattern – putting a strain on its already overburdened health system. India has the fourth largest number of cases globally – closing in on Russia’s number; though we believe Russia’s official case number is highly manipulated.

Sum of new daily cases by continent since March 1st - COVID weekly update week 27COVID-19 Update Week 26

As we have been highlighting for several weeks, Latin America and particularly Brazil, has become the epicenter of the COVID-19 outbreak. The USA too is experiencing a sharp rise in cases. The data in the following chart shows the sum of new daily cases. It is unsmoothed hence the rapid oscillations day to day, but the trajectory is clear. Europe, which was the center of the pandemic in March and early April, has largely brought the outbreak under control, although the level of control is fragile and likely to suffer some recurrences over the coming weeks.

The USA was the next epicenter – with New York state a particular concern. However the USA tried to move quickly towards reopening and, in some states, had not fully locked down in the first place. These states are now seeing rapid increases in the viral outbreak.

But even the USA is being overtaken by Brazil in terms of daily new cases and the wider Latin America region seeing a large spike in cases, with 18th June recording a new daily high for any region with almost 85,000 new cases. However, as we’ve said from the outset, the level of testing is likely insufficient to reveal the true extent of the outbreak.

Counterpoint - Sum of new daily cases by continents since March 1st - Week 26 Update

Daily new cases in India are also on the rise. For several weeks, the number of official new cases seemed to be oddly consistent day after day. However that trend has now broken to the upside – with an average of over 15,000 daily new cases in the last week, compared to fewer than 10,000 in the first week of June.

The US and India are two of the three largest smartphone markets globally. In both countries lockdowns are easing and we’re seeing the smartphone markets returning to growth. But both markets are at risk of renewed restrictions on freedom of movement, though returns to full lockdowns remains unlikely.

Counterpoint - Weekly average of daily new cases by countries since March 1st - Week 26 Update

Jobless claims likely to surge

Many of the financial support packages implemented to help companies furlough workers are likely to come to an end over the coming weeks and months. These schemes served to forestall widespread redundancies in many countries. As these financial props come to an end, it will inevitably lead to a sharp rise in redundancies as companies seek to align their cost bases to much lower revenue run rates.

The US had few such packages which led to the sharp rise in jobless claims over the last two months. This has continued with an additional almost 1.5 million new claims in the last week. The unemployment rate in the US is running at over 13%. While some employers have started hiring again, others are continuing to make layoffs at roughly the same rate.

Now, we expect the waves of redundancies seen in the US to start occurring in other countries. Qantas, the Australian airline has announced 6000 lay-offs – adding to 10s of thousands of other travel-related job cuts.

Unemployment is usually a lagging indicator in recessionary times. Given the severity of the economic downturn caused by coronavirus, the response of the unemployment rate may be much sharper than we’ve seen in previous recessions. Unemployment always impacts consumer confidence and will likely therefore dampen any recovery in sales as lockdowns continue to ease.

COVID-19 Update Week 25

China is trying to contain a flare up of new cases in Beijing – which has caused a partial tightening of restrictions in some areas of the city. This is raising concerns about the potential for a second wave of infections. However the first wave is still gathering pace in most of the world.

COVID-19 Dashboard by CSSE at JHU - Week 25 Update
Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

The total number of official cases has risen by almost exactly one million in the last week, with Brazil on course to surpass 1 million cases within a few days. This is very likely a gross underestimation of the actual situation in Brazil following President Bolsonaro’s calamitous handling of the outbreak.

New Daily Cases by Country since March 1st - Week 26 Update
Source: Data from European Centre for Disease Prevention and Control, Counterpoint Research

Beyond Brazil, which is now the new epicenter of the outbreak, we’re seeing significant increases in cases in several states in the USA that had moved away from lockdowns around the middle of May. States seeing record daily increases in infections include Florida, Arizona, Texas, Oklahoma, Nevada and Oregon. After bringing its rate of infection growth down from its peak, the US has settled into a pattern of averaging over 20,000 new cases per day – while there are fluctuations on a day to day basis, taken over a period of seven days, the trend is flat.

India, which is also relaxing its lockdowns, is now seeing new cases moving higher, although the official statistics for India still look strange with reported daily new cases within a very tight range. This may simply be a function of the availability of testing, rather than a specific effort to manipulate the statistics, such as we have seen in Russia. But this notwithstanding, the trend in India is upward. This is also the case in neighbouring Pakistan and Bangladesh. Indonesia has also seen its highest level of new daily cases in the last few days.

Sum of New Daily Cases by Continent Since March 1st - Week 25 Update
Source: data from European Centre for Disease Prevention and Control, Counterpoint Research

Many politicians have contracted COVID-19 over the last few months – notably the UK prime minister, Boris Johnson. There are now several more senior politicians either with confirmed infections or self-isolating. These include the president of Argentina – a country that has seen several cases among politicians. The president of Honduras has been admitted to hospital with pneumonia linked to coronavirus. And in central Asia, the national leader of Kazakhstan has tested positive for the virus.

With infection levels continuing to climb in many markets around the world, should we therefore expect the imposition of new restrictions on movement and the closure of shops again?  We currently think that this is unlikely. Countries have to balance the need to protect the public with the pressing economic reality that businesses cannot return to any kind of normalcy with lockdowns in place, crippling output and constraining wages or preventing people from earning at all. This is especially acute among informal workers that make up the majority of workforces in many emerging economies. The threat from malnutrition and other diseases of poverty is likely greater than from COVID-19 itself. The new normal may be having to live with COVID-19 as a constant threat, or frequent feature of the disease landscape of the world.

COVID-19 Update Week 24

The USA has surpassed 2 million confirmed cases. A grim statistic, but at the population level it is not worse than several other countries. As the US eases its lockdown measures across the nation, we are monitoring the viral response. The US is off its highs of daily new cases – seen in late April, but the rate of infection has not slowed much for several weeks and continues to run at around 20,000 new cases per day.

Counterpoint COVID19 Dashboard by CSSE at JHU - Week 24 Update
Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

Brazil stopped reporting official case numbers and deaths last weekend. But its supreme court has ordered the restoration of reporting. It’s not a surprise that the Brazilian government wanted to supress the information, because it is so bad. Brazil has cemented its position as the second worst affected country after the USA. The real infection rate in Brazil is likely far higher – and could exceed that of the USA, based on analysis from the University of Pelotas.

Counterpoint Daily New Cases per Thousand Population After Countries Reached 100 Cases per Day - Counterpoint - Week 24 Update
Source: Data from European Centre for Disease Prevention and Control, Counterpoint Research

However Brazil is not the only country seeing cases rise. Mexico has reported its highest daily rise in cases within the last few days. Also of concern is India, which had observed one of the world’s most severe lockdowns. However, it is progressively easing the lockdowns despite a high levels of viral transmission in the country. Like Brazil, India has limited capacity for testing, so the official figures likely under-represent the true picture of infection levels in the country. The data from India is also strange in that the total of daily new cases has been consistent, a few cases below 10,000 for five days in a row. This looks suspiciously like data is being manipulated. Similar patterns were seen in Russia, which has been manipulating its data.

Irrespective of individual country anomalies, the pattern of new daily cases is far from flattening, it is actually getting steeper; every day since May 28th has seen more than 100,000 new daily cases globally.

Counterpoint New Daily Cases by Countries Since March 31st - Counterpoint - Week 24 Update
Source: Data from European Centre for Disease Prevention and Control, Counterpoint Research

Economic Impact

The impacts, both direct and indirect, are seen in economic data that continues to show the world slipping into a deep recession. The OECD published its forecast earlier this week and it makes for sobering reading. The OECD has outlined two scenarios – the first being a deep recession followed by a slow return to growth – a so-called U-shaped recovery. The second scenario factors-in the potential impact of second wave of coronavirus infections, that may emerge in the latter part of 2020 and in to 2021; fall and winter in the Northern hemisphere.

Counterpoint Research A Collapse Followed by a Slow Recovery - Counterpoint - Week 24 Update
Source: OECD 2020

Despite the dire economic data, we continue to believe the smartphone market is relatively resilient compared to many industries. Consumers rely heavily on their mobile devices for information and entertainment, however they may delay upgrading to a new model when economic uncertainty is high. This is most likely to disproportionately impact low-end devices – those favored by consumers on marginal incomes – as they are the ones most likely to find their jobs impacted by the economic downturn.

Some updates from companies in the smartphone supply chain indicate less negative outlooks than many fear. Some of this is likely due to supply issues resolving, but there are also positive indicators connected with OEM demand as shops reopen. We will continue to monitor these modest green shoots because we expect they will move to more solid indicators of demand recovery.

COVID-19 Update Week 23

The focus of the pandemic in Latin America, especially Brazil, continues to gather pace. Recent analysis by the University of Pelotas suggests the real rate of infection is seven times higher than the official rate. We expect the situation in Brazil will continue to worsen for some time as lockdowns have been relatively poorly observed, and even those that have been, are being relaxed. Furthermore, the lack of widespread testing makes it impossible to assess at what stage the infection is at. However, notwithstanding that, if the actual caseload is seven times the official number, it would imply the true figures of those infected in Brazil could be almost double that of the USA.

Counterpoint Sum of New Daily Cases by Continent Since March 1st Week 23 UpdateUnglobalization

The coronavirus pandemic has contributed to a trend we’ve been seeing develop over the past several years – that of a gradual weakening, and in some cases a reversal, of globalization.

China arose to become the workshop of the world over the last three decades. This was especially true in the smartphone ecosystem where the vast majority of smartphones have historically been manufactured in China – mostly in and around Shenzhen.

The China-US trade dispute has accelerated focus on the location of manufacture as some OEMs fear that any escalation in the tussle between the two countries will risk their ability to export goods.

Other self-interested projects, such as Brexit, which is driving a wedge between the UK and the rest of the EU, is further fracturing the fragile stability in global trade.

Now COVID-19 is adding new pressures to international divisions that were already evident. The fact that the Chinese government seemed to supress initial information about the novel coronavirus, potentially missing opportunities to contain it before it became an international problem, has harmed China’s perception around the world. And the extent to which various industry sectors are exposed to fluctuations in supply is more evident now than it was before.

As markets try to gradually reopen following the pandemic, it is unlikely that we return exactly to the way things were before the virus outbreak. Travel to develop new products was curtailed during the worst phase of the outbreak, leading to delays in product launches. It is probable that travel continues to be restricted in various ways. Immigration for work will be increasingly constrained as governments impose limits on visa grants – often in response to those imposed by others.

National governments have tended to become more nationalistic – favouring local players, many of whom they will have had to prop-up with crisis financing – this again will hurt international trade. In India, there has been a backlash against Chinese applications. This has spawned a rise in apps that target Chinese apps for removal from devices, though these apps have themselves run into problems.

In the telecoms sector, Huawei was already under suspicion in the US, Oceania, India and parts of Europe as a vector for Chinese espionage. The US has been lobbying governments to ban Huawei from critical telecoms infrastructure. The responses to COVID-19 and other developments in China, for example the pressure on Hong Kong, are leading governments to look again at previous decisions on Huawei, potentially leading to reducing its potential involvement.

The US is also piling-on pressure by extending its year-old inclusion of Huawei on its ‘entity list’. The new extension will effectively prevent Huawei from using TSMC as a foundry for its Hisilicon-branded chipsets. We write about it in detail here.

And TSMC is making strategic investments to build new fabs in the USA, something it hasn’t done before. This is no knee-jerk reaction however; decisions this big are years in the making.

Nevertheless, it does point to a new trend that we expect to see post-COVID-19 – more diversified supply chains. Instead of relying on few suppliers and geographic locations, we expect manufacturers to develop a broader web of suppliers. The net result will be greater complexity, possibly slower development and slightly higher costs, but more resilience.

COVID-19 Update Week 22

Little evidence showing a slowdown in new cases since last week. Over 700,000 new cases have been added to the total in the last seven days. Global official deaths have now exceeded a third of a million. However this total is likely a significant underestimate. For example, the official UK total is 37 thousand deaths. However deaths in which coronavirus was a likely cause of death, but no testing was carried out to confirm it, is closer to 70,000.

COVID-19 Dashboard by CSSE at JHU - Week 22 UpdateNevertheless, new cases are continuing to moderate in Europe and North America, with the focus shifting more and more to Latin America, as we identified in last week’s update. The latest data shows this trend quite starkly.

Sum of New Daily Cases by Continent Since March 1 - Week 22 Update

Brazil is a large part of this rise, it now ranks second globally in terms of cases – and this despite a lack of testing, so the real number is likely far higher.

Brazil is a populous country, but accounting for the population size the following chart shows that Brazil is now leading in terms of daily new cases.

Daily new cases per thousand population after countries reached 100 cases per day - Week 22 Update

Our Latin America Senior Analyst, Tina Lu, summed up the situation in Brazil as follows:

Everything is feeling quite chaotic in Brazil.  As the number of confirmed cases and deaths in Brazil continues to increase, the not poorly organized lockdown has taken a toll in the economy. The PT, the previous ruling political party, which ruled Brazil for 20 years, is asking for President Bolsonaro’s impeachment, which is bringing increased uncertainty to the country.

Recently, the president, the state governors and some legislators agreed to work together. This truce is providing some measure of political stability that is adding confidence to the market.

Bolsonaro was pushing for states to reopen, but currently Sao Paulo and Rio are both on lockdown until May 31st and Sao Paulo may remain locked-down through June, as this state is seeing one of the highest impacts in Brazil.

Despite the turmoil, most smartphone production facilities are continuing to operate. All major OEMs’ factories are currently in operation, although output is around 40% to 50% of normal levels due to the need to observe strict hygiene and social distancing measures. In addition the market itself is sharply lower.

Despite the situation, OEMs are launching new models. For example, Nokia-HMD launched the brand in Brazil with its Nokia 2.3 model.

Channels are operating as best they can, almost all shopping malls are closed, but many have implemented store pick up.  In addition, online sales, with WhatsApp aid, is increasing, especially for large sales ticket items.

Despite the decline in output, stores have sufficient stock to cover the reduced sales; demand having reduced more than supply.

COVID-19 Update Week 21

While many countries are now either beginning to ease restrictions or are planning to do so, the number of cases continues to rise. The WHO reported on 20th May, that the highest daily increase was registered on 19th May – over 105,000 new cases. The world has also reached a new milestone in the total number of infections – it has now exceeded five million. While these numbers, as always, must be seen in the context of broader availability of testing, it does indicate that the pandemic is showing no signs of abating.

COVID-19 Dashboard by CSSE at JHU - Week 21 Update
Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

Of the countries that are faring worst in terms of case numbers and deaths from COVID-19, there is an emerging pattern. Those countries with populist and/or authoritarian leaders tend to do worst (US, Russia, Brazil, UK) while those with progressive, democratic (and often female) leaders are doing best (New Zealand, Germany, South Korea, Finland). It is not within the purview of Counterpoint Research to speculate about politics, but it is relevant if you see any of these markets as being critical to your business fortunes. Countries that are not coping well with the pandemic are likely to experience more severe and prolonged coronavirus outbreaks with the potential for extended periods of disruption.

Poorest Countries Becoming Focus – Latin America Worst Hit

As we have discussed in previous weekly updates, the impact on emerging markets is likely to be felt most strongly. This is because they don’t have healthcare systems capable of responding to a pandemic like the coronavirus. For example, Uganda has more cabinet ministers than critical care beds in hospitals.

Brazil is a case in point. It officially has the third worse outbreak in reported numbers of cases. But testing is not widely available so the real level of infection is likely far higher – quite possibly the highest globally, with some experts in the country estimating at least three million cases.

Brazil has a populist president, Jair Bolsonaro, who has consistently played-down the threat from the disease, urging people to defy attempts by Brazilian state authorities to maintain lockdowns and social distancing measures. Brazil has lost two health ministers since the start of the outbreak – both in disagreements with Mr Bolsonaro.

Reports from Manaus, which is the biggest city in the Amazonas region, suggest that the healthcare system has been completely overrun. They also show the use of mass graves as the conventional burial processes are unable to cope.

Mexico is also experiencing a rise in the level of infections, even as it begins to relax lockdowns in some municipalities. Like many emerging countries the level of testing is low, so the real situation is difficult to assess with any confidence.

Peru is another country in Latin America that has experienced a severe outbreak. Testing of stallholders in a market in the capital Lima, showed that almost 80% were infected. And this despite Peru otherwise applying relatively sound quarantine measures. It is thought that public produce markets across the Latin America region have become significant vectors for viral spread.

Counterpoint Sum of New Daily Cases by Continent Since March 1st - Week 21 Update
Latin America is emerging has a coronavirus hotspot as daily new cases in Europe and North America continue to moderate (Source: European Centre for Disease Prevention and Control and Counterpoint Research)

In our revised handset forecast, Latin America is notable because we expect it to suffer the most significant downturn of all the world’s regions. This is because the economies were already fragile and because online channels are underdeveloped relative to many other regions. In most Latin American countries, mobile handsets are not regarded as essential items and are thus unable to be sold. If you would like more details of our regularly updated forecasts, please contact your Counterpoint representative, or contact

COVID-19 Update Week 20

Many people are impatient to be out of lockdown. This is understandable. Lives and businesses have been put on hold. The economic disruption is likely to be long-lasting and profound.

And the straightforward facts are that even in the most heavily impacted countries very few people have actually contracted COVID-19. This means there remains a large percentage of the population that has had no contact with the virus and has not developed immunity. So countries are therefore vulnerable to new spikes in infections, such as has been seen recently in South Korea. A vaccine, should one even be possible, is unlikely to be available widely until late 2021. So, what should we do until then?

The disease is potentially deadly. But the vast majority of people who catch it, recover without issue. And many never knew they even had it in the first place as they were asymptomatic. Until broad scale population testing is undertaken, we won’t know for sure the exact mortality rates. However based on current data, COVID-19 has a mortality rate of between 0.5% and 1%. At 1% it would be 10x deadlier than seasonal flu. But this still means that even among those that do contract the disease, only a small number will become seriously ill. For most it is a mild disease with no long-lasting impact.

Policy Models

Policy responses by governments are based on modelling the direct impacts of COVID-19 – but not other impacts to the well-being of the economy or society. For example the mental health impacts of being made redundant or of businesses going bankrupt.

The most common policy response has been a lockdown. In most cases this is done to reduce the pool of people susceptible to infection, lowering the transmission rate and easing pressure on stressed healthcare systems. But what has been the impact of different policy responses?

Sweden did not implement a severe lockdown. It essentially asked the population to apply common-sense, to not gather in large numbers and to practice social distancing as far as possible. Its outbreak, as illustrated on the following chart, has not been significantly different than other countries that did implement more severe restrictions.

Daily New Cases per Thousand Population After Country Reached 100 Cases per Day - Week 20 Update
Source: Data from European Centre for Disease Prevention and Control, Counterpoint Research

We expect that governments will be forced to continue gradually lifting the lockdowns despite the potential for infection levels to return to a pattern of growth. US states are starting to reopen. This despite the fact that, outside of New York State, infection rates were not consistently falling.

For countries that have a much higher percentage of casual workers, less developed healthcare systems and little to no social welfare, it is likely the impact of the lockdown on people’s lives and livelihood will be more severe than the disease itself and will be difficult to continue to enforce without draconian measures or the risk of civil unrest.

And it is likely the disease will be here to stay. It will not disappear as abruptly as it appeared. It may undergo mutations over time – most likely to a form that is less lethal.

So life should start to move to some sort of post-COVID state – but what will that look like?

The Hangover

The impacts on our ways of life have been profound and there is much talk of the ‘new normal’. Twitter has told staff that are able to work from home that they may continue to do so, forever. Several other organizations, Facebook and Google for example, have implemented homeworking for some roles until later in the year, but Twitter is the first to make the change effectively permanent. It is unlikely to be the only one. Vodafone, in its results presentation highlighted that 90% of its European-based staff had switched to home working. It said that productivity had not been significantly impacted, though it did note that staff were working longer hours.

Changes in many industries are likely to be long lasting. With even a modest increase in the numbers working remotely, the use of digital collaboration tools will increase, commuting levels decline and international travel – for both business and leisure – also likely to be permanently altered. Vodafone said it had seen a dramatic fall in roaming revenue of between 65-70% which is likely to cost it Euro 0.5Bn, although lower churn is leading to savings on connection commissions. It also experienced a rise in SMEs asking for payment delays or suspensions and large enterprises delaying projects.

Retail has seen a strong shift to online channels. There may be some return to offline when restrictions ease, but much of the shift is likely to be permanent. Vodafone said that through March and April it saw a strong shift to digital channels.

Changing Forecasts

We have revised our forecasts for the year to account for more severe impacts. We now expect the smartphone market will be down 10% year over year in 2020 – driven by shifts in replacement rates and the impact of a deep and longer recession. However, we continue to see mobile communications as essential. All our consumer research has highlighted the fundamental role it plays in people’s lives; a smartphone is usually the last thing someone looks at before sleeping and the first on waking. However, for most people, buying a new smartphone is a discretionary purchase and one that can be delayed in the face of economic uncertainty. But it’s not a purchase that can be delayed indefinitely. This means the market for smartphones is likely more resilient than many others, but it is not immune from the impact of the current economic turmoil. For more details on our forecasts, please contact us directly.

COVID-19 Update Week 19

More financial results have confirmed the picture that was emerging from early reports. The impact of the coronavirus is hitting all companies but with wildly different levels of severity. This will play out as countries move towards a relaxation of the most severe levels of lockdown. The focus now shifts to the shape of the economic recovery.

Economic activity rebounded in China quite quickly, but remains at a reduced level compared to where it would otherwise have been at this time of year. The initial rebound looked promising – an expectation that businesses would get back to pre-coronavirus levels. But this has not fully happened. Much of daily life remains curtailed – fewer people are eating at restaurants, using public transport, visiting shopping malls. As we consider countries that are behind China in the progress of the disease’s development and that were harder hit, for example Europe and the USA, what can we expect?


Countries across the region are now moving toward easing the most severe restrictions. Germany, the EU’s largest economy, started to allow small shops, hardware stores and car dealerships to reopen in late April. Restaurants and hotels can reopen from May 9th. Even the Bundesliga football season can resume from late May – albeit with matches played in empty stadiums. Large gatherings may be permitted from September provided there’s no resurgence in the levels of infection.

Italy allowed manufacturing and construction to resume earlier this week. Shops will be allowed to reopen from mid-month. Schools will not resume until September.

France is allowing some stores to reopen from May 11th, but people are being encouraged to continue working from home until at least June.

Spain is extending its state of emergency through May 23rd, though it is allowing people outside to take exercise.

The UK is reviewing its options and will make announcements at the weekend. It is expected to introduce a phased relaxing of the lockdown.


There is a patchwork of different approaches to relaxing stay-at-home orders across different US states. The US administration is anxious to get the country back to work as jobless claims in the last seven weeks have exceeded 30 million.


India has extended its lockdown until at least May 21st. It has also introduced three zones to identify the most and least affected areas, with greater relaxations allowed in the so-called green and orange zones. However the red zones include the major economic centers such as New Delhi, Mumbai and Bangalore.

For the above markets, we expect some level of normalcy will have been reached by June – with most stores open and people starting to return to offices, though we do not expect a full move away from increased levels of remote and home working, perhaps ever.

This is unlikely to be a smooth resumption of economic activity. There is a high chance of new spikes in infection – especially if measures to maintain physical distancing – are not observed. This can lead to the R0 or reproduction number exceeding 1.

Our regular chart of the rolling seven day average of new cases across several important markets highlights several concerning points:

  1. While the new cases in the US are trending lower, the pattern is not consistent – even with averaging. We also note that widely available testing is still not in place in all parts of the country, so, as with many countries, the true picture of infections is likely far higher.
  2. Russia has been included this week instead of Germany. Like many dictatorial states that like to control the news flow, Russia was slow to acknowledge that coronavirus was even a problem. But now it is officially reporting more than 10,000 new cases per day. With an economy that’s highly dependent on oil, the outlook for Russia is bleak.
  3. Brazil’s new case line continues to rise – and has now exceeded the patterns observed in the most severely impacted markets in Europe. Given the tension between President Bolsonaro and state governors, which is creating confusion in the country about how best to respond, we expect that the numbers in Brazil will continue to worsen.
  4. India – the new daily cases also continue to rise, even as the government plans some easing later this month. Should this curve continue its upward trajectory, extensions to the most severe restrictions may not occur.

Daily New Cases After Country Reached 100 Cases Per Day Week 19 UpdateV, U or W shaped recovery?

That the world is in the grip of a recession is not in doubt. The question is what does the future hold in general and what does this imply for the technology sector in particular?

Economic forecasters are wrestling with the data. The most likely outcome for the global economy in the first quarter was a year over year contraction of around 1.3%. The US is thought to be running at around 12% lower than it was a year ago. Goldman Sachs estimates that the impact of a severe lockdown, such as applied in Italy, leads to a GDP decline of 25%. Even countries that successfully contained the outbreak, such as South Korea can expect a GDP decline of 10%.

Surveys of consumers in several countries suggest that many will not rush to return to pre-coronavirus lifestyles – for example a reluctance to visit bars, restaurants and jump on aeroplanes. But as we noted in last week’s update, spending on streaming services, gaming, online retail etc, has been holding up. So any recovery will have a different complexion than the economy before the coronavirus outbreak.

However, governments will not be able to prop-up ailing companies and furloughed employees indefinitely. This will likely lead to a rise in companies going bankrupt and employees, currently being kept in a state of suspended animation, being made redundant. This suggests the rate of unemployment in many countries will trend down or, at best, flat for many months. Unemployment is normally a lagging indicator in ‘normal’ recessions. This one is far from normal, unemployment has immediately spiked higher. Some of the casual workers that were quickly laid off, may be able to find new positions as economies rebound, but salaried worker unemployment is likely to get progressively worse for months to come – exacerbating already poor levels of consumer confidence.

The indicators all point to a lengthy period of reduced economic activity – so a U-shaped recovery is more likely than V-shaped. And any re-emergence of coronavirus infections either later in 2020 or in early 2021, will almost certainly cause a second dip – producing a potentially even more destructive W-shaped economic pattern.

COVID-19 Update Week 18

Since last week, we’ve now had many more companies reporting results for 1Q as well as giving their assessments of what the future holds. Companies rarely have perfect visibility of their downstream markets, and even if they do, take care not to over or under play the risks for fear of being penalized by the financial markets. But much as a school of fish or flock of birds simultaneously change direction, insights can be gleaned by listening to their collective voice. And what we hear is: the first quarter wasn’t so bad, the second quarter will be worse. The outlook for the year is unclear, but the nearest analogue we have is the 2008/9 financial crisis, so until greater clarity emerges, we will use that as our guide.

Economic tide recedes

In addition, we’ve had initial GDP numbers from several countries – notably the USA that posted a fall of 4.8%, its largest contraction since the financial crisis of 2008, an end to the longest period of expansion in its history, and likely the first taste of a more severe downturn in the second quarter. The US has also now recorded 30 million jobless claims in the last six weeks.

The US GDP number comes on the heels of China’s official GDP statistics – a drop of 6.8% – its first contraction in GDP for four decades. And although China’s economy is now gradually moving forward again, its GDP outlook for the year will be little better than 1% growth, in the best case.

The COVID-19 wildfire continues to rage

An update on the COVID-19 numbers. Several grim milestones have been reached this week. The world passed 3 million confirmed cases, the US alone accounting for almost a third of them and its total number of deaths, as has been widely reported, has exceeded the number of US service personnel killed in the Vietnam War. However it’s European countries that have the highest number of cases and deaths per 1000 population. But the number of confirmed cases is not the same as the real total number of cases because it is a function of the level of testing. Many emerging countries do not have the facilities to test widely, so the official numbers likely underplay the impact in many countries. This fact will become more and more apparent over the coming weeks and months.

Counterpoint Daily New Cases After Country Reached 100 Cases Per Day - Week 18 UpdateAmong the countries that have been hardest hit so far, the picture continues to improve. South Korea that was hit early, but instituted rigorous levels of testing, and tracking and tracing, has reported no new cases on 30th April; it’s new case load has been hovering at around 10 per day for several weeks. Even countries that had severe outbreaks, such as Spain, are managing to contain the spread of the disease through strict lockdown and physical distancing measures. This is leading to the cautious restarts of grounded economies, the phased opening of schools, and efforts to return to some semblance of normality. Some US states have been jumping ahead, even while the outbreak still rages. The danger of relaxing the lockdown too soon, will be new spikes in infections. Let’s see.

Early Results

As the Q1 earnings season progresses, we’re seeing the impact of the virus on companies financial results and forward guidance, if given.

Sectors hardest hit include those involved in travel, hospitality and tourism, offline retail of non-essentials, automotive and oil.  Those actually benefiting include grocery retailers, online retail specialists and software and service companies supporting remote access and working. Telecom operators and internet companies that have mixed revenue sources not overly reliant on advertising, are generally holding up, though the pattern of the businesses is changing. And the 5G rollout continues, with a few hiccups, so infrastructure players are reporting respectable results. A selected few companies highlight the trends:


Reported earnings yesterday. Given its broad exposure to the mobile communications market, it should be indicative of the general health of the sector. It indicated that the initial impact of the coronavirus outbreak was around a 20% fall in handset sales – mainly from China (see our analysis of the market here). Qualcomm expects this to deepen to a 30% fall in the second quarter, as the impact of the outbreak ripples across the globe. However its overall outlook for the year, is for around a 10% annual decline. It nevertheless continues to hold its forecast for 5G devices for the year – though its forecasts covers a wide range (175m to 225m).


Apple reported iPhone volumes were 7% lower y/y in the first quarter. It started the quarter strongly, before the coronavirus hit the Chinese supply chain and consumer demand. Apple now has a much more diversified revenue base than it did a few years ago, so benefited from more people accessing its digital life services and adding wearable devices to their personal portfolio of Apple devices. And while Mac and iPad volumes were down, many of the buyers were new to the products. More detailed analysis here.

Texas Instruments

TI has exposure to many industries – so provides a broader snapshot of developments. Its results and commentary highlighted the nuances that are characterising the impact of the coronavirus-driven downturn. It reported broadly flat sequential revenues, down a few percent y/y. It said March orders had rebounded following the China New Year extended shutdown, but this surge in orders had started to evaporate into April. It is, nevertheless, continuing to build inventory, speculating that the market may prove to be more resilient, while expecting around a 20% drop in 2Q. TI further said it is basing assumptions on the 2008/9 financial crisis – in the absence of anything better to work with. Management highlighted the snapback in demand in 2009 as the reason it is building inventory in the second quarter.

Another chip vendor with a broad customer base, Microchip, also saw March orders rebound. It is also assuming a pattern similar to 2008/9, but unlike TI, Microchip is trimming its costs.

Intel has a narrower customer base. Its first quarter benefited from stronger sales of notebook PCs and for datacenters – especially from cloud providers. While its business looked strong, it maintained a cautious outlook given the economic conditions, and pulled back from guiding for the year.


Microsoft is benefiting from the massive rise in remote and home working. It reported that in a single day in March, its system hosted over 200 million meeting participants generating over 4 billion meeting minutes (I have been in meetings that felt that long). It’s also benefiting from the rise in gaming; with nearly 90 million active users of Xbox Live. Xbox Game Pass has more than 10 million subscribers. Its Windows OEM, Surface and gaming revenue increases were enough to more than offset declines in ad-driven search.


Facebook and other social media platforms, have seen surging use during the last few weeks as locked-down consumers turn to platforms like Facebook, WhatsApp, Instagram and Messenger to stay in touch and assuage boredom. It has surpassed 3 billion people using at least one of its services. The surging use, though, is coincident with falling advertising revenues and falling advertising rates, as advertisers seek to cut costs as their industries are directly impacted (travel, entertainment) and channels to market are closed for others (offline retail).

Google’s parent Alphabet reported similar patterns in ad revenues, though Google is benefiting from stronger cloud computing revenues; its business is more diversified than during the 2008/9 downturn.

Operators – holding us together

The importance of high quality, high capacity, resilient networks has never been more starkly shown than now. It’s testament to the work that telecom providers do that they are able to flex to the increased demand with barely anyone noticing. With most operator stores closed, sales of mobile phones are lower, but this also means churn has trended lower, so acquisition costs have not weighed on the financials. However, with many consumers and businesses using fixed-price plans, increasing usage does not necessarily translate to substantially higher revenue. Two operators from different parts of the world illustrate these trends:

Orange – the France-based operator with shares in operators in Europe, Middle East and Africa, saw first quarter sales up 2% – with decent performances across its properties apart from Spain – but here it was more competition than coronavirus that impacted its progress.

America Movil – one of Latin America’s largest operators, also saw a 2% improvement in sales in Q1. It has seen many of its stores close amid tight lockdowns across the region. But it reported that most sources of revenue were higher. However, the second quarter will be tougher because most of the first quarter was unaffected – AMX’s outlook for the second quarter and rest of 2020 is more downbeat as it expects a severe economic pullback to hurt demand.

Offline retail battered, online strongly up

Grocery retailers – both online and offline are having a good crisis. But most offline retailers are faring badly. In the tech sector, results from the UK’s Dixons Carphone, which includes the mobile retailer Carphone Warehouse provide a good illustration.

Immediately prior to the coronavirus outbreak, Dixons Carphone announced it was closing over 500 of its Carphone Warehouse stores and moving to a store-in-store model with its large Currys-PCWorld consumer electronics stores. The viral outbreak accelerated the Carphone Warehouse store closures and forced the temporary closure of Currys-PCWorld offline stores as well. However, in the latter part of March and into April, the company has seen a 166% increase in online sales – with the early emphasis on homeworking products – PCs, printers — then food preparation and storage products. More recent sales have emphasized health and fitness. It says that the rising online sales have replaced around two-thirds of the missing offline sales.

Automotive – a car crash

Auto sales have started to rebound from low levels in China during February; Nissan is the latest company to report encouraging signs. However, the broader sector continues to struggle across Europe and the US. The current consensus from car companies is an expectation of a 20% reduction for the full year, though some are talking of current sales being only 20% of what they would normally expect. The problem for the car companies is that the pandemic is coming amid the biggest ever transition for the industry – from internal combustion engine to electric drive trains. This transition alone was an existential threat for many car companies; sales of ICE cars are relatively profitable – electric cars are not. That profit from ICE car sales was needed to fund the colossal investment needed to shift to electric cars. With near-term sales mortally wounded, the investment outlook, which was already challenging, has become even cloudier.

COVID-19 Update Week 17

While the countries around the world start to consider their next steps – furthering lockdowns or easing them – companies are now reporting results from the first quarter. These provide an indication as to the likely impact for second quarter as most economic activity was seriously impacted only in March and will likely deepen before, hopefully, recovering by mid-year.

Economic pressure mounts

Oil prices are often viewed as an important economic indicator. Indeed, during the early 2000s, as China’s economy grew along with many other emerging markets – the so-called BRIC economies – the oil price rose as demand for the commodity increased, reaching a peak of $146 per barrel in 2008, just before the last recession.

Currently, Brent Crude is hovering around $22 per barrel, off its lows but still at levels not seen for decades. Oil is not a particularly good economic indicator, because it is subject to the vagaries of politically motivated variations in supply. However, the current low price shows that the market has little confidence in the global economy, suggesting we’re likely in for an extended, deep, recession.

Unemployment is a better economic indicator, but one that typically lags in periods of recession. But the coronavirus is causing an atypical economic situation. Millions of workers across the developed and emerging economies are out of work. Around 26 million workers have filed new unemployment claims in the US in the last few weeks, more than 15% of the workforce.

In emerging economies, the situation for millions of casual workers is bleak. In countries including India, Bangladesh, Indonesia, Philippines, over 70% of workers are in the informal economy with most unable to work during the lockdown, but with government support patchy or non-existent.

Lack of remittances

For many emerging economies, remittances from citizens working abroad, form a significant portion of the economy – especially for poor families. Many of these emigrants work manual jobs in the hospitality, transport and building sectors – all of which are working at reduced levels, or not at all, which is causing the flow of remittances to dry-up – heaping further stress on already weakened economies.

Low income, little chance

Even in developed countries, the impact of coronavirus is falling disproportionately on the poorer segments of society. Research by a team of economists that interviewed 4,000 US workers in late March, showed that 16% had already lost their job and among the 20% least able to work from home, 40% had lost their jobs. Conversely, those with relatively high incomes, above $60,000 per year, had seen relatively little impact on their employment status.

These data feed through into how spending on products like smartphones is likely to respond to the coronavirus crisis. For many consumers, high cost discretionary purchases are being put on hold. For the smartphone market this means longer replacement cycles. However, buyers of high-end and premium smartphones are the ones least likely to be directly affected by the economic meltdown. As they come to terms with the new normal, their levels of anxiety are likely to diminish, confidence rise and we therefore expect purchasing of essential technology products, which smartphones are, to rebound. The short term however, will be characterised by a short, sharp, slowdown. And products typically purchased by those on the margins of the economy, prepaid, low-end smartphones and feature phones, are likely to be disproportionately more impacted, though this may be offset by people opting for cheaper alternatives. In Europe, phones for elders – mostly feature phones – have seen an uptick in sales as families provision loved ones with every available means to remain in contact at a time when physical distancing is required.


As companies’ 1Q 20 results are starting to be reported, the impact of the lockdowns is becoming clearer. European car sales were down by more than half in March compared to 2019; March is usually a strong month for sales. February sales, by comparison, were flat y/y. Nevertheless, after enduring several weeks of lockdown, several car manufacturers, including Daimler, VW and Renault are starting to reopen plants in Europe.

AT&T reported decent results, but sales of phones were down sharply in the quarter.

LG Display reported a sharp contraction in sales, citing weak demand for TVs and smartphones, though demand for monitors, laptops and tablet devices was improving, to support increased remote and home working.

Building 5G Networks – a burning issue

Problems continue in the UK and other markets where conspiracists are drawing a link between 5G and the spread of coronavirus. This absurd notion has led to several base stations (the vandals have little idea which are and are not 5G) being set on fire. Government bodies and telcos are appealing for sense to prevail, but conspiracists are deeply distrustful of the authorities and continue to spread the rumors via social media.

In addition to vandalizing base stations, telecom engineers have been harassed and threatened with physical harm, even when not actually working on 5G infrastructure.

The combined impacts of this, together with the needs for social distancing and the difficulties in obtaining planning approvals during lockdowns, is slowing network rollouts.

Impact of telecoms

Although challenges are mounting, most telcos and ISPs are delivering resilient services in the face of substantially increased demand for services. For example, US telcos are reporting:

  • Core network traffic up ~25%
  • Hotspot usage up 60%
  • Gaming traffic up 75% or more
  • Lower cell-to-cell handoffs – by 30%-55% as people stay home
  • Wi-Fi calling up 85%-105%

Impact on other tech

Gaming is one of the sectors seeing the greatest surge in use as people turn to gaming in increased number to escape the boredom and anxiety caused by extended lockdowns. However game developers are finding the new remote working mode is increasing the challenge of readying new titles for release. While much of the coding can be, and has been,  done remotely, the coordination costs are sharply higher when teams are no longer collocated. This may delay the launch of some new titles this spring.

How to exit lockdown

Daily New Cases After Country Reached 100 cases per day Week 17 update

With the numbers of new daily cases in many markets slowing, or at least flattening, governments are trying to balance their need to get their economies rolling again with the fear that opening up too quickly will cause a surge in new cases. This fear is well-founded. Research from China, Korea and Italy suggests that people that previously had COVID-19 continue to test positive for the virus even a month after the symptoms are gone. And even in the most badly affected countries, only a tiny proportion of the population has been infected, meaning that if those that have recovered from the disease do have immunity, this will apply to very few people in total.

Nevertheless, various countries are cautiously opening up. Spain has allowed some construction and manufacturing workers to return to work. In Germany, shops up to 800 square meters in size and car dealers are being allowed to open. However France has extended its lockdown into May – as has India.

Several US states are discussing how to reopen their economies – some under pressure from protesters. The states include New York, the worst hit in the US, and California.

Contact Tracing by Phone

One of the tools that will enable economies to reopen, is the ability to test widely and then track and trace those that may have had contact with an infected person. Apple and Google have taken the unprecedented step of aligning their Bluetooth protocols for iOS and Android. This will allow app developers to use the capability to develop apps capable of alerting phone users that they may have been in close proximity with someone who became ill with coronavirus. The system uses the Bluetooth LE protocol. When an appropriate app is installed, the smartphone continuously broadcasts a unique code while simultaneously listening to codes from other phones in the vicinity; Bluetooth LE’s range is up to 9 meters. Phones will create records of which codes it has ‘heard’. Should a user of the app subsequently fall ill and test positive for COVID-19, the code of the infected person’s phone will be broadcast, allowing all phones with the app to cross match if it was in close proximity with that of the infected person.

This could prove an excellent way to tighten the contact tracking and tracing process, which is notoriously difficult, resource intensive and time consuming. However, it both requires that a high number of smartphone owners install the app – ideally significantly more 50% of the population – and that there is widespread and easily accessible testing, which currently only applies to a few countries. Markets where similar initiatives have been tried, for example, Singapore, have not achieved the requisite numbers of app installs despite a relatively compliant population.

A further hurdle is the lack of Bluetooth LE support in many phones, especially feature phones that are still widely used in many emerging markets.

So while the accord between Apple and Google is remarkable, it’s no silver bullet.

COVID-19 Update Week 16

The global total of official infections now exceeds 2 million, with the worst affected country, the USA, accounting for over 30% of the total. The real number of infections likely far exceeds the official total; many countries are still unable to test sufficiently large numbers to verify the extent of the disease outbreak.

Nevertheless, for several countries in Europe and the United States, the rate of new daily cases is noticeably slowing. And the rate of slowing in new cases has been sufficient for several European countries to have either already started to lift the most severe restrictions, or start to plan for this to occur. Borders are being reopened gradually, though in Europe, this is partly to admit agricultural workers to harvest crops that would otherwise rot in the fields.

Counterpoint Daily New Cases After Country Reached 100 Cases Per Day
Source: data from European Centre for Disease Prevention and Control, Counterpoint Research

As restrictions are relaxed, there is a strong possibility of further flare ups in infections necessitating a re-tightening of restrictions. And lockdowns continue to be enforced in India and many other markets, with prospects for these to be extended into May.

But while there are positive signs from tracking the path of the disease, the global economy is far from out of the woods. Claims for unemployment support are soaring. The US released new unemployment claims today that exceeded 5 million, meaning the total of new claims for the month have exceeded 20 million.

While some European countries have seen unemployment rates rising, governments across the region are paying up to 80% of employees’ salaries in a variety of furlough schemes. These governments learned from the problems caused by the 2008 global financial crisis, when such schemes weren’t widely deployed. This resulted in several European countries, notably Spain and France, suffering high unemployment rates for up to a decade following the recession. Germany, that did use the furlough scheme following the 2008 recession, recovered more quickly.

Governments that are capable of doing so, are putting in place schemes to support companies and even the self-employed, so that as the coronavirus wildfire passes, green shoots of recovery can quickly be nurtured. But the pattern of recovery, will vary dramatically from sector to sector and even company to company.

The International Labour Organisation says that the sectors facing severe declines in output and therefore a high risk of layoffs or furloughs employ almost 38% of the global workforce, which equates to around 1.25bn people. This implies that even a V-shaped recession will likely be deep. And any U-shaped recession will cause an extended period of misery for many.

Emerging market stress

Capital flight from emerging markets has been acute. This can be seen in the foreign exchange markets where the Mexican Peso, Brazilian Real, Russian Rouble and South African Rand have all depreciated substantially against the US dollar. The slump in world trade and almost complete cessation of tourism is also hitting many emerging markets. So while many of these markets are not feeling acute pain from the impact of the viral outbreak, their economies are under severe strain.

US Dollar to exchange rates with various currencies
US Dollar to exchange rates with various currencies, Source: Trading Economics

Consolidation in corporate power

Many large companies were in a healthy condition before the outbreak, with ample cash on their balance sheets and limited debt. They will likely be comfortably able to withstand the inferno and come out the other side, not only in a reasonable shape, but finding the landscape less cluttered than before; a consequence of the viral outbreak will be that smaller and weaker firms, are less able to survive. And those that do, will be vulnerable to being acquired. Expect therefore that power will concentrate in the hands of those that already had most of it before the outbreak.

A further consequence is likely to be an acceleration in the diversification of supply chains. Companies that were overly reliant on China were hurt early in the outbreak. But before the coronavirus crisis, we’d already seen companies moving to diversify their manufacturing bases away from China; Vietnam and India are likely to be the biggest beneficiaries.

COVID-19 Update Week 15

The rolling seven day average of new daily cases of corona virus show that lock downs and physical distancing do work, though it takes time. They work by reducing the pool of potential people that the virus can infect, which slows the spread and allows authorities a chance to contact-trace and quarantine those that have been infected or that have been in contact with people infected. It is a mammoth task and economically destructive.

The US was slow to implement lockdowns and they’re still not universal across the country. The chart below shows the rolling seven day average of new daily cases for selected countries. A rolling average is used because the data is noisy and the average helps to smooth out anomalies. Previous epicentres in Italy and Spain are trending lower. The UK (including Prime Minister, Boris Johnson) continues an upward trend, though at a slower rate.

The US is, very clearly, still escalating rapidly though the rate of growth is slowing, however this may be more a function of the number of tests being carried out.

Counterpoint Daily new cases after country reached 1000 cases per day
Source: Data from European Centre for Disease Prevention and Control, Counterpoint Research

China and South Korea continue to offer encouraging pictures with new daily cases in the few 10s and daily life returning to normal, even in Wuhan.

Economics of a pandemic

Our concern is now shifting more and more to the long term economic impact that the pandemic will cause. The world is officially in a global recession as declared by the International Monetary Fund around 10 days ago. However the impacts are likely to be felt differently among the developed and developing countries.

Lockdowns, while effective at slowing the spread of the virus, are economically harmful. In a crisis, perfection is the enemy of the good. We have seen governments rushing to close borders and lockdown cities, while also creating financial lifeboats to help citizens and corporations weather the storm. While many of these measures are good and necessary, the haste with which they’ve been established has left many vulnerable people outside the safety nets.

In rich countries, governments have the capacity to support the economy for months. In developing countries, this is not the case. In India, the government acted with great speed to lockdown the country. But in so doing, it seemed to forget the millions of migrant and casual laborers that make-up a large percentage of the workforce. Many found themselves not only jobless, but also homeless – more or less overnight. With nowhere else to go, and little functioning public transport, many embarked on journeys by foot, for hundreds of kilometres to their home villages. In some cases carrying the virus with them. And many of the world’s poor live in overcrowded conditions with little access to facilities to carry out the mandated regular handwashing.

There are similar cases throughout the developing world. South Africa and Brazil, among many other countries, have implemented lockdowns of varying severity, meaning many migrant and casual workers are out of jobs, but with limited or no savings to fall back on. This puts casual workers in an invidious position, either starve, or try to continue working in some capacity and risk either contracting the virus, the wrath of the authorities, or both.

And the governments of emerging economies are not strong enough to support their populations or corporations during lengthy shutdowns. And worse, capital is fleeing to safe havens – which has meant the US dollar, almost exclusively. The US Federal Reserve is easing access to the dollar for some countries, but this is likely scant comfort.

The US, while rich, is a highly stratified society with a large underclass working low paying jobs, effectively on a casual basis; most American employment contracts have few protections against immediate dismissal. And even those with decent contracts tend not to have access to statutory sick pay. As a result jobless claims have skyrocketed – 16 million new claims in the past three weeks. And those were the ones able to negotiate flaky jobless claims websites that continually crashed under the weight of numbers, or visit overcrowded unemployment offices, running the risk of contracting the infection while doing so.

Rich countries have, nevertheless, created massive cash lifeboats to support companies unable to continue operating at capacity, or, in some cases, at all. Some countries, the UK for example, are also creating support packages for the self-employed – such as builders, plumbers and electricians. These packages should mean that as the countries come out of lockdown they can rapidly resume economic activity at something close to previous levels. The calculus is that a rapid resumption of economic activity will start fiscal flows to start paying-down the massive debts that governments are establishing.

We doubt, however, that the resumption of activity will be smooth across all sectors of the economy. Furthermore, the new ways of working for many may become a new normal, with more people than ever working from home. Companies may be able to reduce the size of office space as they realize that as many as a third of employees can work effectively from home on a near continuous basis.

Sectoral Impacts

We have updated our assessment of sectoral impacts. These are not designed to be read as detailed forecasts, but to guide thinking around which sectors are likely to be hardest hit and which are, conversely gaining in the current situation.

Counterpoint COVID-19 Expected Impact Relative to Baseline ForecastSmartphones: The smartphone market in China saw a sharp hit in January and February but was already recovering before the end of March as supply chains, retail activity, return to normalcy. We expect 2Q to reflect a slight rebound with further slight positives throughout the balance of 2020.

The smartphone market outside China is contracting sharply as retail stores are shuttered leaving online as the principal route to market. The downswing had already started before lockdowns were implemented. It may be as deep as China’s sharp slowdown but will likely last longer. Unlike China, where at least a part of the slow down was supply driven, the rest of world’s contraction is driven more by consumers withholding replacement activity until they get more comfort with the new economic realities of their situation. Assuming the lockdowns ease within a few weeks, the recovery should be strong, though we can expect some consumers to change their spending patterns.

Automotive: The auto sector is likely to be hit hard globally. In the early part of the year Chinese car sales almost halted entirely. And while they are recovering, there is now a mismatch between supply and demand. This pattern is likely elsewhere. In Europe the COVID-19 crisis has also coincided with new and highly restrictive emissions regulations. It is likely part of government stimulus spending will encourage consumers to scrap older, higher polluting cars, in return for cash subsidies.

Hearables: following a modest supply interruption we expect sales of hearables will benefit. Consumers that are self-isolating, working from home and relying more on streamed media will likely seek out high quality audio.

Retail: the impact is nuanced.

  • Offline Retail: Grocery is seeing a surge as consumers stockpile for isolation and/or disturbed supply chains. Non-essential stores however, are being forced to close.
  • Online Retail: sees a surge in demand as consumers forego venturing out to physical retail stores. Provided deliveries can still be made, consumers realize a preference for online over physical retail and while there is a mean reversion, online remains slightly ahead of physical

Streamed media: Physical isolation causes an uptick in demand for streaming media services especially video and games. Streamed music benefits less as consumers seek sources of news through radio stations or news-based podcasts.

Transport in all forms is hard hit. Airline travel is sharply lower, with many fleets grounded or flying extremely limited schedules. Tourism is also largely halted. The recovery is likely to be long, slow and painful with many companies seeking bailouts from governments.

Telecom: not charted, but we are seeing telecom service use substantially higher. For some mobile operators the reduction in international travel means lucrative roaming revenues are reduced, but more use of hotspots to enable home working means many are using networks more with many users migrating to higher data packages as a result, so a net benefit to operators – both fixed and mobile.

Cashless Payments: cash is being seen as a potential vector for the virus. This is stimulating the faster adoption of digital payment mechanisms across the world, even overcoming fears about the security of some systems.

Big Tech: in general the established tech giants are faring well. Use of cloud resources and over-the-top applications supporting audio and video-conferencing and collaborative remote working are seeing strong upticks in demand. Aside from a few early teething troubles, the services have flexed to accommodate the increased demand effectively underscoring the importance of resilience, quality and capacity.

One additional positive for the tech sector is that governments preoccupied with fighting the impact of the viral pandemic will spend less time scrutinizing M&A. This together with substantial pull-backs in valuations will likely mean a number of new deals will be made through 2020.

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Coronavirus (COVID-19) – Update Week 14, 2020

The novel coronavirus continues to wreak havoc on daily life around the world, and in an increasing number of countries; 180 have now reported cases. In the past seven days the total number of confirmed cases has doubled again and is still accelerating – with new cases increasing by around 20% per day (75,000 between March 31st and April 1st).

But physical distancing and lockdowns do bring results – Italy’s number of new cases on April 1st was almost the same as the previous day – indicating that it is nearing the top of the new case growth curve and should see a decline in the days to come. However more worrying were spikes in new cases in Spain and France, both countries that had previously seen slowing growth. However, the data is noisy, and a slowing trend is seen in most markets that have been rigorously enforcing lockdowns and physical distancing measures.

Last week we said the US was, ‘almost certain to overtake all other countries..’, it didn’t take long. The US now has a massively higher number of cases than all other countries – almost twice as many as Italy. We indicated our concern about the US when we started keeping this weekly update and this has now been borne out. The fast growth in newly reported cases is partly a function of greatly increased testing, which is now uncovering the extent of the infection. Despite the sharp rise in cases, March manufacturing data from the US was more resilient than feared. But new jobless data shows a massive rise in new claims 6.64 million compared to an expected 4.88 million. That the new number is so much worse than even the most pessimistic forecast highlights that the full extent of the impact remains unclear.

Coronavirus COVID-19 Global Cases by John Hopkins University (JHU)
Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

However, while many states in the USA have implemented lock downs, there is still a stark contrast in indicators of activity. For example, two snapshots taken at the same time and at the same scale, from FlightRadar24, show the level of air traffic over the US compared to that over Europe. Pre-COVID you would see comparable levels of air traffic, though the US has always been somewhat higher. But in the midst of the current crisis, we are surprised at the continued level of passenger air traffic in US airspace. While the one over Europe is early evening and that of the US is around 2pm EDT, there is clearly more traffic over the US. Inspection of the flights does show a high proportion of cargo, but many are still passenger flights. By contrast, around 80% of the flights over Western Europe are cargo flights. On April 1st, the Trump administration said it was considering isolating hotspots from flight traffic, but has not yet imposed such as restriction. That said, data shows the number of passengers in the US is dramatically lower. So while many aircraft continue to fly, most are almost empty.

FlightRadar24 – images taken on March 31st at around 2pm EDT. (2)

FlightRadar24 – images taken on March 31st at around 2pm EDT. (1)
Source: FlightRadar24 – images taken on March 31st at around 2pm EDT

Income and Infection – strongly linked

New York City accounts for almost half the cases in the US. Data released by the city by zip code indicates a strong correlation between median income levels and the number of cases. This is unsurprising as the localities with the lowest incomes see the most overcrowded living conditions, where people have the greatest difficulty in self-isolating. This also gives us concern about fast growing and emerging markets that exhibit similar living conditions.

The Dharavi area of Mumbai is home to around a million people living in extremely high population density, in make-shift housing. The first coronavirus casualty was reported overnight. It is reasonable to expect the number of cases in the area to multiply rapidly. The Indian authorities are enforcing the largest lockdown globally. While official cases remain relatively low in the country, the lack of testing means that real number of cases is likely far higher. We continue to monitor the situation in India with concern as it is now the second largest smartphone market globally and still growing – unlike China and the US. A deep and sustained impact from corona virus will have a profound impact on the global smartphone market.

Indonesia is the world’s fourth most populous country. It has also seen an uptick in infections. While again the official number is low, we also think community infection is likely occurring unseen due to the lack of testing and preparedness. Expect the case rate to move sharply higher in the coming days and weeks.

Brazil has seen a sharp rise in cases. President Bolsonaro has been dismissive of the threat posed by the disease and has been urging Brazilians to return to work. However, most of Brazil’s state governors are defying the government and requiring people to self-distance and remain home. Nevertheless, it is likely that community transmission is underway in Brazil and cases will grow exponentially.

Daily new cases by continent show how the virus has spread East to West. Asia is not out of the danger zone yet.
Daily new cases by continent show how the virus has spread East to West. Asia is not out of the danger zone yet.

Economic Impacts

The International Monetary Fund declared that the world had officially entered a global recession. Given the scale of reductions in economic activity across multiple sectors, this is not surprising.

Forecasts are being updated as the situation unfolds. Currently, most economists are expecting a contraction in economic growth of around 2% y/y in 2020, which represents a downside swing of some 4.5 percentage points over previous forecasts.

Change in GDP Growth Due to COVID-19 in Selected Countries
Source: Economist Intelligence Unit

Smartphone Market Impact

We have modelled the most likely impact on the smartphone market based on the mix of factors we have seen so far, and expect to see over the next few months. We have looked at parallels from recent recessions to help guide our thinking. Our conclusion is that we expect to see a sharp contraction as consumers withhold making discretionary purchases during periods of maximum uncertainty. The result is an extension in the replacement cycle. However we expect that extension will be limited to no more than six months. We further expect that the long run average market growth rate will not vary significantly – but the near term growth rates will reflect the slow down and then rebound — a similar pattern to that seen in recent recessions but allowing for the different level of market maturity.

Other Sectors

Automotive remains hard hit. Most production facilities across Europe and North America remain closed. It’s a similar story in India. During the recession in 2008/9 the governments in the US and Europe implemented scrappage schemes to encourage consumers to replace older vehicles and inject spending into the auto sector. Given the strict new emission norms being implemented in Europe, governments in the region are likely considering the potential to gain benefits from newer lower emission vehicles that will go some way to addressing air pollution, while also pushing money into the hard hit auto sector. We are therefore expecting the return of scrappage schemes, perhaps with escalating rebates for the most fuel efficient cars such as full electric.

Subscribing clients can request more detail of our forecasts across a number of sectors including smartphones, IoT, automotive and more.

Coronavirus (COVID-19) – Update Week 13, 2020

A week is a long time in politics, and also in this coronavirus outbreak. In the past seven days, the number of confirmed cases has risen by 255,000 and still accelerating – currently by around 50,000 cases per day.

Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

China still has the most cases, but Italy is fast catching up. Italy and Spain have recorded more deaths than China.

Statisticians have observed that the coronavirus outbreak precisely follows mathematical models and it is these that are informing government behaviours once an initial period of denial is overcome. The stages are clear and follow a consistent pattern. This from a former colleague, Dr Timo Partanen:

  1. Discovery phase – the virus has been present for days or weeks, spreading within a population but largely unnoticed because testing has not taken place. Testing starts to happen but is lagging behind. The daily growth rate of cases is very high.
  2. Exponential growth phase – the unrestricted spread of the disease is about 25% per day. This can be observed when the virus is spreading freely in a community without any social distancing measures, but testing is comprehensive enough so that significant numbers of new cases are recorded. Italy stayed in this stage for around the first 12 days of March.
  3. Declining growth phase – When social distancing is established, the growth rate starts to decline in a somewhat predictable pattern. How long and how quickly it declines varies by country based on the measures taken. This has happened in Italy for more than a week; yesterday’s growth rate, 7.5%, was again lower than the previous day. Spain, at 18% is behind Italy but growth rates are starting to slow. France 13%, Germany 13% are below the unconstrained growth rate. The UK, at 18%, is still high, but social distancing measures have only just been rigorously applied. The next two weeks should show a declining rate of growth in the UK.

What about Korea and Japan?

Both countries followed a different pattern, because their strategies were to test and track the epidemic intensively. They didn’t get a long period of 25% daily growth, because they followed every case and isolated all contacts. That cut the “natural growth” towards 10% a day.

And where is the USA?

As a whole it is still in the discovery phase and the numbers are distorted by the lack of tests. Some states have applied tough measures – such as California. But at the country level the growth rate in cases in the last 24 hours was almost exactly 25%. It is still not under control and there is no clear indication of how widely the virus has spread already. For example, in New York testing was expanded properly only last week and it is now undertaking more than 15k tests per day, and is finding 5k cases per day. The federal government is unwilling to impose the most stringent levels of control for fear of impacting the economy more deeply. This will likely mean a longer period of unconstrained growth in cases, unless almost all individual states apply the lockdown in a coordinated fashion. But it is the federal government that controls air traffic, for example.

It is almost certain that the US will overtake all other countries, including China, with the highest total number of cases.

Anomalies in the numbers

Iran is likely far, far worse than official statistics imply. Iran has not imposed a lockdown, so we expect there to be an almost unconstrained spread of the virus among the population. But with little testing and a government that rigorously controls communication, we may never know the true extent.

Russia too is likely to be experiencing a worse outbreak than official numbers suggest. It has established special facilities to deal with the outbreak, but is not reporting its cases freely.

India – the official number of infected is low. But while it is growing relatively quickly (20% in the last 24 hours) the government has moved fast to implement draconian lockdown measures that should slow the spread even if the real level of infection is much higher. The problem for many places in India is that social distancing, in some of the most densely populated areas, will be difficult to sustain for long. India has implemented the fiercest measures of any country. It will be a test case of how to bring the outbreak under control across a vast and populous country.

Counterpoint Covid Weekly Update: Air Traffic
Air traffic over India March 26th. Almost all flights visible are overflying. Source: FlightRadar24

Impact on the Global Economy

There is a high probability of a global recession occurring in Q2 and Q3 of 2020. Sectors most obviously impacted include travel and tourism, hospitality and entertainment; people are not travelling, eating out or going to the cinema. These sectors employ millions globally and have come to an almost complete stop in many countries.

The stark economic indicators seen in China in February are now being replicated in many other countries, even while China gets back on track.

The disruption to international travel is hurting trade already. Over half of global air freight is carried on passenger aircraft. The image below from FlightRadar24 looks similar to last week’s. But an examination of the aircraft criss-crossing the Atlantic shows that around half are cargo planes. The American Association of Port Authorities, an alliance of ports of the US, Canada, Caribbean and Latin America has warned that cargo volumes during the first quarter are likely to be down 20% y/y. Jobless rates in the US are surging, applications for income support in the UK have jumped.

Counterpoint Covid update: Reduced air traffic over the Atlantic
Reduced air traffic over the Atlantic and half of it freight, March 26th. Source FlightRadar24

Governments are acting fast though. The experience of the financial crisis of 2008/9 showed that decisive action helped address the damaging levels of uncertainty. Central banks in Europe, US and in other countries have prepared stimulus packages of staggering magnitude. Yesterday, the US Senate approved a package totalling around $2trn (9% of GDP). The total extra fiscal stimulus announced so far amounts to more than 2% of global GDP – far more than was applied in the wake of the 2008/9 financial crisis.

The stimulus and support packages may help. But consumer uncertainty tends to lead to withholding spending in times of trouble, only returning to previous levels once confidence returns.

Developed countries are fortunate in being sufficiently wealthy that they can afford to support the economy and workers for an extended period. In addition, healthcare systems are well-developed. Poorer countries have a higher proportion of casual workers and patchy healthcare, so the impacts will likely be, proportionally, greater.

Impact on Smartphones and Technology

We have developed new forecasts that are available for subscribing clients. These show a sharp fall in demand, moving in a wave across from China to the west, consistent with the viral spread. Under lockdowns, almost all offline retail activity ceases, though online continues to function.

The smartphone market is resilient; smartphones are perceived by consumers as essential. However, aside from replacing a broken phone, the purchase is usually discretionary and can therefore be delayed, effectively extending the replacement rate. The resulting contraction in the market will likely be short term in nature, we expect it to recover relatively quickly once the worst of the outbreak passes.

Homeworking and social distancing are underscoring how important technology is to keep people connected and entertained. While we see the Coronavirus pandemic as a sharp, short-term negative, we continue to believe the long term impact on the market will be marginal.

Counterpoint will be hosting a webinar to talk through the likely impacts as we see them. Click here to register

Coronavirus (COVID-19) – Update Week 12, 2020

While the pandemic escalates in the west and increasingly wreaks havoc on daily life, China and South Korea are starting to get back to normalcy. Early, stringent action by the authorities was effective at containing the outbreak. There is chance of flare-ups but we expect those to be dealt with rapidly. Other countries such as Taiwan, Hong Kong and Singapore also appear to have been successful in limiting the disease spread. The biggest risk for these nations now is nationals returning home from countries on the fast escalation curve – notably Europe and the USA.

In the last eight days, the number of confirmed cases has risen by almost 100,000. Almost a quarter of these new cases are in Italy, with many more in Spain, France and Germany. The UK has also seen a steep rise in cases, with London the epicentre of its outbreak.

The US continues to give us concern. The country as not been able to test widely, so we continue to believe the official number of confirmed cases massively under represents the true scale of the problem.

India, Russia, and many parts of the Middle East and Africa, and much of Latin America, have either been successful at preventing the virus from spreading or, more likely, are not able to test sufficiently effectively to reveal the true scale of the pandemic.

The bottom-line, is that the picture from Johns Hopkins shown below is just the ‘tip of the iceberg’. The full scale of the disease may not be known for months or even years.

Coronavirus COVID-19 Global Cases by CSSE at JHU
Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

Impact on Commercial Activity

Turmoil continues on stock markets. Central banks are releasing unprecedented funds and instituting quantitative easing, but investors continue to lack confidence as they cannot see an end to the disruption. In this environment only safe haven assets are in demand – recently the US dollar. The price of gold had escalated but sold-off to cover investors’ losses in other asset classes while others opted for the US dollar above all other assets.

Many countries are being progressively locked-down. Italy has been in this state for a couple of week and is being joined by France, which is imposing penalties on citizens straying outside without good reason. Many European countries are closing land borders to prevent foreign citizens from entering. Canada and the US have closed their land border. Brazil has closed its border with Venezuela.

In markets that are locked down, all but essential stores are closed. Online remains active though and has seen strong upswings in activity.

Airlines are reducing flights, with many grounding part or all of their fleets, and temporarily laying off staff.

Reduced air traffic over the Atlantic compared to normal on 19th March.
Source: FlightRadar24

Travel and tourism, and hospitality more broadly, is hard hit with hotels empty and restaurants and bars being shuttered.

Impact on the smartphone market

Mobile phones are considered a necessity by most people. This means it is a resilient market. Recent parallels include the sub-prime mortgage crisis and subsequent global recession in 2008/9, the tech bubble bursting in 2001 and the impact of SARS in 2002/3. In each case, the market was knocked back but rebounded in the aftermath.

The market has changed since 2009 – it is now much more mature, and in the markets currently most severely impacted, almost everyone has a smartphone. For many consumers, the purchase of new smartphone is a discretionary purchase; they can choose when to buy. The consequence of this has been seen over the last few years in lengthening replacement cycles, which has caused the smartphone market to contract as people hold on to their phones for longer and longer. The immediate impact of the coronavirus pandemic, is that the replacement cycle is likely to stretch still further. But consumers will replace. So while the market will slow down during the worst period of the crisis, it will rebound; we don’t think volume will be lost – just that the pattern of demand will change.

There are two main risks, that could cause a material lowering of our long-term outlook:

  1. An extended global recession. Currently we are assuming a relatively sharp, but short recession, on a global basis.
  2. A second wave of viral infections peaking in 4Q 2020 and 1Q 2021. Past pandemics have seen this double peak. COVID-19 may be the same.

There are also mitigating factors:

  1. Preparation of a vaccine – many teams around the world are working hard to isolate a vaccine – though this is unlikely to be ready until 2021.
  2. Effective treatments – there are some promising lines of research applying current medicines to treat those most affected by this coronavirus.
  3. Herd immunity – if sufficient people in a population are infected, recover and develop immunity, it is harder for the disease to spread. It is unclear how effective this is with COVID—19.

We are updating our forecasts more frequently during this period. Subscribing clients will receive regularly-revised short-term forecasts that assimilate the latest information.

Impact on other technology markets

Demand for home working equipment and services are sharply higher, displays and headsets, and conferencing services. Access to Microsoft Teams was temporarily impacted earlier this week as thousands of normally office-based workers across Europe tried to access the service from home. More capacity is likely being made available.

Automotive Markets

Car companies are still coping with supply issues arising from the initial outbreak in Hubei Province that caused many parts to go into short supply. These companies are now having to contend with potential shortages of labor, as workers either become sick or have to self-isolate. Several factories in Europe and North America are implementing temporary closures.

We also expect demand for new vehicles to be sharply lower in many markets as car dealerships are closed.

Audio visual equipment and streaming

With higher numbers spending more time at home, demand for streaming entertainment is escalating sharply. This may trickle over into demand for new equipment such as TVs, but big discretionary spends are more likely be deferred. However, demand for hearables is likely to rise as households try to manage the situation of multiple people enjoying their own content without disrupting others. Hearable devices are readily available from online stores.

Coronavirus (COVID-19) – Update Week 11, 2020

As we predicted two weeks ago, the WHO has been forced to pronounce the coronavirus a pandemic. It doesn’t change anything much in relation to the likely viral spread, but should help focus the minds of governments that may be reluctant to take the necessary steps to contain the outbreak, or mitigate its worst effects.

Also as we noted last week, the coronavirus infection rate in China is decelerating. This is good news and should allow most factories outside the Hubei province to move back toward normal, seasonal activity levels by the beginning of the second quarter.

In other countries, however, the picture is less positive with more than 25,000 new cases reported in the last week.

Coronavirus COVID-19 Global Cases Johns Hopkins CSSE
Source: Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)

The pattern of infection and recovery is becoming clearer. The infection spreads rapidly through a population, reaching a peak and then subsiding almost equally rapidly once there are no new people to infect. By locking down areas and curtailing socializing, the pool of potential virus recipients is reduced, causing the outbreak to moderate more quickly. This is what happened in China. But a rapid lockdown it is not what has happened in Iran, Italy and many other parts of Europe, and the United States. The disease has likely been in the community in these countries for several weeks before being formally identified. Containment measures are belatedly being taken in some countries, Italy for example.

Counterpoint COVID-19 Many Fewer Flights Than Normal Originating and Terminating in Italy
Source: FlightRadar24

Many Fewer Flights Than Normal Originating and Terminating in Italy

But in most other countries, little is being done to either monitor the virus’ spread, or to prevent it. Angela Merkel, Germany’s Chancellor, has warned that as many as 60-70% of the German population may become infected, if stringent measures are not taken. It is reasonable to assume that this rate of infection would apply to other, similar countries.

The USA is most concerning. Evidence from Seattle suggests the existence of coronavirus in the community as far back as early February, but the Centers for Disease Control and Prevention (CDC) was not able to effectively test for the virus at that stage and even prevented some research laboratories from reporting their own positive test results. The alarming conclusion is that the reported positive cases in the USA likely massively underrepresent the true picture of infections in the USA.

Stock Shocks

As the potential impact of the virus has become better understood, stock markets have been hit hard, with major indices registering falls in excess of 10%. Some of the falls were also related to a conflict between major oil producers that saw a sharp fall in the price of oil. Nevertheless, money markets are trying to price-in a short sharp shock to the world’s economy with little to guide them on what this will actually look like.

Supply-Driven Downturn

Most recessions have been caused by falls in demand. The most recent one of 2008-9, was triggered by a financial crisis that spilled over into a sharp reduction in demand as banks spiralled into a debt crisis of their own making.

In this case, there is the potential that workers will be prevented from working due to illness or having to isolate themselves at home. If this occurs for a significant proportion of the population at any given time, it will have a short-term negative impact on economic activity – initially from the supply of labor, but then also in demand, as consumers will refrain from buying much beyond core necessities. The shock to the system should be short-lived and likely resolved relatively quickly. We expect a rebound in most economic activity to occur before the year end.

Central banks are continuing to offer support. The Bank of England in the UK has cut interest rates by 50bps in a move that echoes that of the US Federal Reserve, last week. However in a supply-driven crisis these moves are unlikely to do much to stimulate economic activity. Governments are likely to need to support small and medium sized businesses that will inevitably struggle with cash flow problems, and support workers that are forced out of work. The UK government is implementing a raft of measures to support small businesses and the self-employed who may not otherwise be eligible for sickpay.

Impacts beyond the numbers

Rumors have been circulating for several weeks that Apple will delay the launch of the, yet to be named, lower cost iPhone. This is to be the successor of the iPhone SE, built around the same form-factor as the iPhone 8 series (SE2, iPhone 9..?).

Problems with the launch were initially thought to be because initial volume ramps could be delayed due to Foxconn’s inability to start production. Travel restrictions on Apple’s engineers flying to China to supervise pre-production testing might also be a factor. And if all these were not problematic enough, just holding a launch event at this time, is difficult. So we expect Apple to postpone the launch for a few weeks at least. Other smartphone manufacturers are continuing to launch new products however (link to blogs)

The E3 2020 expo in Los Angeles is the latest among more than 250 trade shows to be cancelled or converted to online events.


We continue to expect a rapid increase in infections in Europe, USA and many other countries over the next eight to twelve weeks before returning towards normal during 3Q and with an expectation of largely normal levels of economic activity by the year end.

Coronavirus (COVID-19) – Update Week 10, 2020

There is cautious optimism that the worst of the outbreak in China is now past. Factories are beginning to ramp up production slowly, though many are still below normal capacity at this time of year. Foxconn said it is running at about half its normal low-season capacity – this equates to about 25% of full capacity. While factories are anxious to ramp-up production, they’re also being careful that labour-intensive work does not rekindle viral outbreaks.

While this is somewhat positive for China, the outlook in the rest of the world is rather more bleak. And the realization of the potential for lasting economic disruption has caused a sharp falls of up to 15% in the value of shares on many stock markets. This has prompted central banks to intervene with support – for example a 50bps cut in interest rates by the US Federal Reserve.

Last week we outlined countries of concern as, South Korea, Japan, Iran, Italy, UK and US. We think these will be good analogues for how the virus is likely to spread more widely.

Coronavirus COVID-19 Global Cases Johns Hopkins CSSE
Source: Johns Hopkins CSSE

South Korea has continued to see infection rates escalate – mostly centered around the southern city of Daegu.

Japan is considering delaying the Olympic Games until later in the year, but has not yet cancelled the event.

Iran has the highest number of deaths outside China, but due to efforts by the regime to deny the extent of the outbreak it has likely led to a greater level of infection in the country. The number of deaths do not tally with the reported number of infections, which must be far higher than the official numbers would indicate.

Italy – it is likely that the virus was circulating for several weeks before being fully recognized. This has led to the level of infections seen and also allowed for travellers to take the infection to other countries.

UK – while the number of cases remain low, several people have been diagnosed who have not been to centers of infection or knowingly interacted with those that have. This indicates that containment is likely no longer possible. The UK government has enacted an emergency plan in which the realistic worse case scenario would see up to 20% of the workforce either off-sick or self-isolating.

USA – new cases are emerging at a fairly rapid rate now, which suggests the virus is circulating and containment is no longer possible.

More than 80 countries have now reported cases, although the actual numbers of reported cases are likely to be the tip of the iceberg; many people have only mild symptoms and may not be counted.


As China gradually recovers from the initial peak of infections, we expect factory production to gradually return towards normal. However, the reduced capacity is likely to continue into the second quarter.


While some supply restrictions ease, we are becoming more concerned about the probable impacts on demand as consumers moderate economic activity in the face of growing infection rates in multiple countries around the world. Our current scenario models a relatively modest decline in demand for smartphones outside China, but there is a growing likelihood that we will revise our estimates downward.

We have also modeled the likely impacts across a range of industry sectors relative to our base line forecasts. Some of these are shown in the chart below:

Counterpoint Coronavirus COVID-19 Expected Impact Relative to Baseline Forecast


The impact to supply and demand was most acute in China. Supply restrictions have started to show up in other global markets. However we are now expecting to see some impact to demand in global markets as consumers moderate their economic activity in the face of personal and economic uncertainty. We nevertheless expect a rapid reversion as the worst of the infection passes with a slight positive rebound effect.


The Chinese automotive sector came to almost a complete halt in January and February. This was mostly driven by a massive drop in demand, although factories also ceased activity through a combination of the Lunar New Year and coronavirus.

Internationally, auto makers have been hit by reduced supplies of parts made by Chinese companies. Several have reported the need to reduce production until supplies return to normal.

We are modelling the Chinese and global automotive sectors to rebound relatively quickly with a slight positive rebound, though we doubt all of the shortfall will be recovered in the near term.

Streaming Media and Gaming

We expect the enforced isolation that many will experience will lead to a greater consumption of streamed media such as music and video, and an increase in online gaming.


Airlines are already cutting capacity – even between countries where there are limited outbreaks. This is driven by business travellers reducing flying – partly due to generally lower activity levels and partly due to the cancellation of large events, for example MWC and the Geneva Motor Show. We expect that as travellers realize that alternatives such as teleconferencing offers a good experience and people think harder about the need for travel – especially in the face of mounting climate change evidence — there will be a longer-term reduction in absolute person/km travelled. UK regional airline FlyBe collapsed late on 4th March. It had been struggling financially, but it cited reduced bookings caused by the coronavirus as a significant factor in it halting operations. It will likely not be the last airline to fail caused by coronavirus.


We think retail will be a tale of two types – offline, brick-and-mortar stores, are likely to suffer a short term decline, while online stores will benefit. Though if there is any significant and sustained impact on logistics, then online stores may also suffer. We expect both to revert to the mean over time, though online may enjoy a slight boost while offline suffers a slight long-term reduction.


The likely extent of infections remains unclear however, we expect countries outside China will likely see a peak in infections in the May/June period before recovering towards normal by the end of 3Q beginning of 4Q. Countries’ ability to contain the outbreak now looks challenging with the emphasis shifting to managing the impact as best they can.

We will continue to monitor and update our scenarios as the situation unfolds.

Coronavirus (COVID-19) – Update Week 9, 2020

  • Global stock markets are, perhaps belatedly, responding to the escalating impact of the Coronavirus outbreak and have started falling on expectation of extended and systematic supply chain disruption. Oil prices are also lower on fears that transport will be affected. Traditional safe haven assets, such as gold, have increased in price.
  • The Coronavirus is likely to be declared a pandemic. A pandemic is when an epidemic spreads to multiple regions/countries. There are political implications to declaring a pandemic, but it doesn’t change the dynamics of the disease spread – though it will serve to heighten peoples’ focus on the potential transmission of the disease and may also contribute to further disruption.
  • With cases escalating fast in S. Korea, Iran, Italy and Japan – and further cases emerging in Germany, Brazil and several other countries, it’s probable the World Health Organization (WHO) declares a pandemic within the next few days.
  • Despite initial failings in recognizing and reporting the novel Coronavirus, China has been quite effective at limiting people’s movement and therefore spread of the virus. But other countries may be less successful at containing outbreaks. And as China is the manufacturing source for N-95 facemasks, supplies for export will be restricted. India likewise is restricting exports of facemasks. Some drugs are also likely to become supply constrained.
  • Developed nations have vulnerable supply chains – shops in big cities are resupplied daily, for example. Any breakdown in supplies can lead to panic buying, shortages and further disruption to travel and many normal behaviors at a population level. At extremes, civil unrest can result in looting and a breakdown in law and order.

Countries to watch closely for developments:

South Korea: a spike in cases and lack of clarity among potentially infected peoples’ movements will lead to more cases developing over the next week or two. Containment currently looks challenging despite the alert level being raised to RED.

Italy: a popular tourist destination, Italy is now attempting to lock-down parts of the country most badly affected. Nevertheless, cases are emerging in other countries based on people travelling from Italy. Likely a prime source for infections across Europe. The forthcoming Italy vs Ireland rugby international match has been postponed based on concern about the virus spreading with travelling fans.

Japan: most cases relate to the impounded cruise liner, Diamond Princess, but the true number could be higher due to poor handling of passengers on the cruise ship.

Iran: even the health minister has been infected. Cases likely under-reported and given the importance of some infected areas to Muslim tourists, high likelihood of spread to other Muslim nations in the region.

U.K. has now started testing people showing flu-like symptoms but who have not been to known infected areas. If infection is found it will indicate that the viral spread has not been contained.

U.S. it is likely that the true extent of cases is unknown and unreported due to lack of screening on ports of entry, lack of sufficient diagnostic testing and lack of funding to health agencies to take effective action. Increased testing, like in the UK, will reveal to extent to which the viral spread has already occurred.

Overall, our expectation that we see widespread transmission of the disease and a concomitant impact on retail sales, supply chain disruption and other economic disturbance has risen from somewhat unlikely to likely. Companies will need to plan for an extended period of disruption to a business-as-usual situation – likely lasting well into the second quarter.

Impact on China and Global Smartphone Demand

  • Demand-side: the PRC economy has been impacted severely during this period. Sales have fallen sharply and will recover slowly. We estimate a 30% drop during the lock down period. The lock down period and travel restriction period will last for at least two months, so affecting through the end of March. Some offline retailers are saying they have experienced a 50% drop in sales during the late January period. However there is some sales offset by an increase in online sales.
  • Supply-side: there will be impact to new devices to be launched in the first half which have facilities in China, as factories will not function properly. Components sourced from China will also be impacted as all factories will resume operation slowly and cautiously. This will range from displays from BOE, CSOT and semiconductors from YMTC and further on. So the negative impact from the supply chain side will last until end of Q2 minimum.
  • Our initial expectation was that the virus would be contained within two months and take three further months for things to get back to normal. We now expect Q1 PRC sales to be down by around 25% compared to our original forecast. This is 18% lower than Q1 last year. But this can worsen if the virus is not contained. Global sales will also go down 7% compared to same period last year. Overall we think Q1 and Q2 will show negative growth both globally and in PRC before rebounding.
  • This is our base case scenario. The downside risks are increasing daily and we will likely revisit this forecast based on emerging information over the next days and weeks.
  • We also expect  China smartphone sales to drop over 20% in Q1 2020. The impact of nCoV could be much more severe than many currently expect. (Click here to listen to the latest Counterpoint Podcast on the Coronavirus)

Podcast: Resilient Smartphone Market Heads Confidently Into 2021

After a few years of decline, we were expecting the smartphone market to grow in 2020. Sure enough, the year did start on a good note. But towards the end of the first quarter, the COVID-19 outbreak started, leading to lockdowns being imposed in several countries over the coming months. All this resulted in a big fall in supply and demand. But as restrictions started to ease, we saw a recovery in sales due to pent-up demand and the new normal of work-from-home and study-from-home. In this podcast, we take a quick look at how 2020 fared and our outlook for 2021.

Despite the economic uncertainty due to COVID-19, the key takeaway from 2020 is that the smartphone market is not only resilient but also dynamic to respond to changing realities. Though the immediate trigger was the pandemic, 2020 saw the market accelerating its shift to online channels. The year also saw the US sanctions on Huawei being tightened, causing a major impact on the company. Huawei lost access to GMS for Play Store and TSMC for chipsets, among others. 

At the start of the year, we were expecting 2020 to be a breakout year for 5G. But while the year saw a lot of 5G phone launches, the uptick started only after the iPhone 12 launch. In just two weeks of its launch, the iPhone 12 became the world’s number one 5G smartphone. 

In the latest episode of ‘The Counterpoint Podcast’, host Peter Richardson is joined by Associate Director Tarun Pathak to talk about how 2020 shaped up amid the coronavirus pandemic. They also discuss the important events that took place this year, brand strategies and more. Finally, we also share our outlook for 2021.

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Weekly Update: COVID-19 Impact On Global Automotive Industry

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Week 22: August Auto Sales Update – Key Markets Indicate Recovery

While many key markets saw signs of improvement in August on month-on-month (MoM) basis, it remains difficult to ascertain the actual market situation as the pent-up demand may be covering up a lower intrinsic level of market demand. Moreover, there is always a risk of a second wave of COVID-19. As a result, Counterpoint analysts continue to hold on to their 2020 annual outlook of nearly 20% decline over last year, with global passenger vehicle (PV) sales estimated at around 71 million units.

United States

Automotive industry in the US continues to remain fragile. Vehicle sales in August declined close to 20% (YoY), reaching 1.33 million units, despite an extended weekend due to Labor Day falling on a Monday. Total January-August 2020 sales reached around 8.8 million units, down 23%. During the month, Toyota saw a sharp decline of 24.6%, followed by Honda (-23%). Hyundai, on the other hand, performed comparatively better with only an 8.4% decline. Limited inventories and fewer incentives continued to hold back sales.


China automotive sales continue their fast recovery. Vehicle shipments reached close to 2.2 million units in August, up 11.6% on YoY basis. Total shipments during January-August 2020 were down 10% on YoY basis. Counterpoint expects the recovery to continue in coming months driven by improving car-buyer sentiment (especially in affluent classes) and pro-NEV (New Energy Vehicle) policies like scrapping of vehicle purchase tax on NEVs and extension of subsides till 2022 with a slower phase-out pace. In June, the government announced to increase the NEV credit ratio by 2 percentage points every year till 2023, from 12% in 2020 to 14% in 2021, 16% in 2022 and 18% in 2023.


Easing of lockdowns in many countries coupled with stimulus packages to support economic revival seems to have started benefitting the region’s automotive industry. Vehicle sales in August crossed 1.2 million, declining 16% on YoY basis. Despite the decline, this was a good performance considering sales in August 2019 were high as automakers rushed to push their uncertified vehicles before the September 1, 2019 deadline for the Worldwide Harmonised Light Vehicles Test Procedure (WLTP) testing.

Other Markets

Japan: Vehicle sales in August crossed 326,000 units, declining 16% on YoY basis. Counterpoint remains cautiously optimistic for coming months as resignation of Prime Minister Shinzo Abe could adversely impact the market.

South Korea: New vehicle sales in the country from top five automakers — Hyundai, Kia, Ssangyong, Renault and GM — declined close to 6%, reaching around 112,000 units. In June, the government extended the 30% cut in consumption tax on passenger cars till December 2020, benefiting sales.

Other Asia: While the year-to-date sales have seen a considerable decline, they are improving on MoM basis. Key markets like India are seeing recovery in MoM sales due to easing of lockdowns.


Author: Aman Madhok


Week 21: Connected Car Gets Pandemic Push

The COVID-19 pandemic has led to many changes in car-buyer behaviour and attitude. Digital services and features are being readily accepted by people as a way to stay connected, trackable and safe. Increasing penetration of in-vehicle screens will lead to easy integration of many of these digital features. This blog identifies and compares key digital features and services available for cars, and which among these will benefit due to changing lifestyle and behaviour of people.

Counterpoint: COVID-19 impact on automotive connected car IoT digitalisation

In-vehicle features

In-vehicle digitalisation is expected to increase as people spend more time in their personal vehicles (compared to public transport). Popular connected features include navigation, digital keys, and Wi-Fi hotspot. Among these, digital keys will see a high demand in the coming years due to its low-cost implementation. Virtual assistant, voice recognition, personalisation and gesture control will also see increasing demand on growing concerns over touching surfaces.

Safety features

Safety features to prevent accidents, such as automatic emergency braking (AEB), lane departure warning (LDW), head-up displays and surround cameras, are expected to gain popularity. Convenience features like automatic cruise control (ACC) are expected to see a limited impact from the pandemic. Nevertheless, since many times these safety features are sold as bundled packages, COVID-19 will aid in their penetration.

Connected Living

Cars are expected to have seamless integration with home, infrastructure, and other devices promoting vehicle to everything (V2X) technology. Increasing coverage of 5G networks will allow seamless integration of cars with other devices and ecosystem. Vehicle to pedestrian (V2P) communication, in particular, will see development. However, high investment involved in developing a V2X technology could delay its implementation.


Connected services promoting social distancing and reduction in the number of garage trips will see a rise in coming years. Pay-as-you-go services will enable touchless transactions for refuelling, toll payments and purchasing on the go, among others. OTA updates will become popular, restricting unnecessary trips to service centres.

Health and location related apps are expected to gain popularity, aiding family members to track the location and well-being of their loved ones. Recently, GM launched a smartphone-based app, Guardian, which uses phone sensors to detect a crash and inform emergency services. Other features of the app include location status and roadside assistance.


Digitalisation in cars will get a boost from COVID-19 with people embracing a digital life that promotes social distancing, safety, tracking and efficiency. Services and features enabling the above will see growing popularity among car-buyers. Digitalisation will also be supported by other factors like increasing screens in cars and increasing 5G network coverage.

Author: Aman Madhok


Week 20: Global Vehicle Sales Remain Fragile

Global passenger vehicle (PV) sales declined by nearly 7% YoY in July, despite regions showing varied signs of month-on-month recovery from COVID-19 induced lockdowns. Overall, cumulative YTD global PV sales are down by 25% YoY through July.

While most regions are certainly seeing signs of improvement, it remains difficult to ascertain the actual market situation. Pent-up demand remains the most important contributor to recovery, which may be covering up a lower intrinsic level of market demand. As a result, Counterpoint Analysts continue to hold onto their 2020 annual outlook of nearly 20% decline over last year, with global PV sales estimated at around 71 million units.


The Chinese PV market continues to make a V-shaped recovery, with July volumes climbing 16% from a year earlier, a fourth consecutive month of improvement, stepping up sales to a higher gear from nearly 7% YoY growth in June. While July PV sales in China rose to 2.1 million vehicles, on a YTD basis cumulative volume have dropped 13% from last year’s 12.4 million vehicles.

Sales of new energy vehicles (NEVs, i.e. battery-powered electric, petrol and electric hybrid and hydrogen fuel-cell vehicles) in July ended 12 consecutive months of YoY declines, with a 20% uptick to nearly 98,000 units. This sale spike possibly demonstrates that NEV OEMs and customers are now at terms with the lowered government subsidies since last year. Counterpoint estimates NEV sales at over 1.1 million vehicles in 2020, a decline of 11% from last year. Continuing to lead the pack of fully electric vehicles, Tesla sold 11,000 vehicles in July while BYD took the lead position in total NEV sales, delivering over 14,000 units.

With China’s economy still recovering, and the possibility of a second wave of the virus still looming, Counterpoint is holding to its earlier base case forecast of nearly 22 million PV units for 2020, an almost 15% decline from previous year.

United States

Sales in the US continue to drift with the pandemic having a prolonged impact on the country’s economy. July PV sales volume, though up versus June, is down nearly 19% YTD compared to the previous year. Fleet sales too continue to remain weak, with July volumes falling by nearly 30% of the volumes reported in June.

COVID-19 continues to spike in key US states, including California, Texas and Florida, resulting in curbs on movement of citizens and strong headwinds for the country’s PV sales. All this while the industry continues to reel from the effects of earlier lockdowns and “shelter in place” directives that had closed thousands of dealerships in March, April and May.

Counterpoint analysts are holding to their earlier forecast for the US — a 24% annual decline for 2020, estimated at around 13.4 million units.

 Europe and United Kingdom

PV registrations in Europe dropped 5.7% in July, with government incentives and lifting of lockdown restrictions having stimulated sales demand back to near pre-pandemic levels. However, from a year-to-date perspective, Europe is tracking an overall decline of 36% for the same period last year. Counterpoint analysts estimate Europe sales to fall by almost 26% this year to 13.6 million vehicles, with key factors like lowered government subsidies and possible resurgence of COVID-19 lingering.

In the UK, PV sales rebounded in July as dealers reopened with easing of coronavirus lockdowns, even as battery electric vehicle sales continued to surge. Based on sales data released by the Society of Motor Manufacturers and Traders (SMMT), British new car registrations rose by almost 11% YoY in July to nearly 175,000 units. July is the first full month of business in the UK after car dealerships were allowed to reopen.

Notwithstanding the signs of a slight bounce-back, Counterpoint analysts remain cautious. European and UK consumers are still wary about buying high-ticket items like cars, given the uncertainty over the economy.

Rest of World

India’s domestic auto industry may have turned the corner in July, with monthly declining trends flattening out. For the first time in several months, the Indian auto industry reported a single-digit decline of 1% in passenger car wholesales, with 198,000 units being shipped last month compared to 200,500 units in the same period last year. July shipments are likely the low point of a V-shaped recovery as Indian states increasingly ease lockdown measures and more dealerships open in key urban centres. The industry still needs to demonstrate a sustainable demand trend, at least over the medium term. As OEMs in India continue to resolve challenges with the supply chain, they will also need to procure buffer stocks of material to protect themselves against future lockdown disruptions.

Japan’s PV sales continue to improve, with a relatively moderate 14% YoY decline in July, compared to a 45% YoY decline in May. Consumers are preferring purchase of smaller-sized vehicles to avoid crowded public transportation. Sales of Mini Vehicles (engine size smaller or equal to 660 cc) currently account for nearly 40% of total car sales. However, with the recent sharp rise in new COVID-19 cases, and possible enforcement of movement restrictions, the recovery in sales is expected to slow down.

In South Korea, the selling rate has slowed down from an all-time high in June, with the first phase of a temporary excise tax cut on passenger vehicles expiring at the end of the month. The market, however, continues to perform reasonably well, with sales having increased YTD by nearly 8%. Sales in H2 2020 are expected to be sustained with an anticipated announcement of the second phase of the temporary excise cut, which has proven to have been a key factor in stimulating demand recovery in Q2 and Q3.

Revised Global Automotive Outlook

While varied signs of a fragile recovery continued to emerge in July, Counterpoint Research remains cautious and is holding to its earlier global automotive sales outlook of around 72 million units for 2020, an over 20% decline from 2019.

Counterpoint: COVID-19 impact on automotive sales

Author: Vinay Piparsania


Week 19: Used Car Sales Start Recovery in Key Markets

Used cars are seeing recovery in key markets not only owing to hygiene concerns amid the COVID-19 pandemic but also reduced car-buyer budgets due to economic downturn. Dealers have started to report increasing (or holding) residual value of used cars, indicating the increasing demand. Increased focus on online sales by automakers, dealers and third-party e-commerce companies is also benefiting the sales of used cars. This blog lists recent positive developments in key used vehicle markets, indicating a much faster recovery for global used car sales when compared to new cars.


  • Leading online used car platform Carvana reported 43% increase in sales during Q1 2020. The company has plans to expand to 100 new markets in the US.
  • Carmax, the leading used car dealer in the country, called back 155,000 furloughed employees (around two-thirds of its workforce).

According to online platform Edmunds, the average listing price of used vehicles increased by $708 in July when compared to June, reaching $21,558.

Counterpoint: COVID-19 used pre-owned car sales growth


Used car market size in India is around 1.4 times higher than that for new cars (compared to 4-5 times in the developed world) and has a huge growth potential. Used car sales had been growing at a much faster rate during pre-COVID-19 times and industry participants are already seeing recovery in such sales:

  • Leading used car online platform Droom announced that the traffic on its platform was up by 175% and leads were up by 250% during the April-June period. During the same period, Maruti Suzuki True Value reported used car sales increasing 15% compared to last year.
  • Mahindra First Choice Wheels also reported higher demand in June compared to last year.


While both new and used car sales continue to decline in many European countries, the rate of decline was steeper for new car sales during Q1 2020 in key markets like the UK, Spain, Germany and Italy.


The fall in used car sales has slowed down in China after the market contracted by 67% (YoY) during Q1 2020. According to the China Automobile Dealers Association, used vehicle deliveries declined from 1.6% to 1.2 million in June, but the deliveries were up 4% compared to May.

 Early Signs

Given the fluid conditions, the early signs of growing used car sales need periodic tracking and should not be generalised as a global trend due to the following reasons:

  • Lower inventory of new cars could momentarily drive used car demand. With auto plants reaching 100% production levels, used car sales could see a decline in coming months.
  • If driven by pent-up demand, the sales could see a decline in coming months.
  • Customers can hold on to their old vehicles for a longer time, creating an inventory shortage for used cars.
  • Used car market growth will vary from country to country depending on government policies, economic recovery and customer sentiments.


Despite the uncertain conditions, it is expected that the used car market will see a much faster recovery from the pandemic when compared to the new car market, considering the strong drivers like growing need for personal vehicles and budget constraints.

Author: Aman Madhok


Week 18: India’s July Automotive Sales on Choppy Recovery Track

India’s domestic auto industry may have turned the corner, with monthly declining trends flattening out, suggest July sales reports.

For the first time in these last few months, the Indian auto industry has reported a single digit decline of just over 1% in passenger car wholesales, with 198,000 units being shipped last month compared to 200,500 units in the same period last year. July shipments are likely the low point of a V-shaped recovery as Indian states increasingly ease lockdown measures and more dealerships open in key urban centres. The month has shown significant wholesales improvement in both two-wheelers and passenger vehicles, indicating significant pent-up demand across the country.

Counterpoint expects to see further improvement in monthly vehicle sales, with new product launches planned, supply chain stability and incremental demand from rural India as the country moves into its traditionally high-selling festive season. We expect extraordinary promotional offers by dealers and automakers to continue, encouraging consumers to visit showrooms and consider purchasing new vehicles.

 Choppy recovery across the country

The July automotive sales distribution pattern, however, shows that recovery from the pandemic not only varies in speed across the country, but is also uneven. This can be attributed to the length of lockdowns in different regions, the underlying economy of a region, consumer confidence, availability of finance and incentives offered by dealers. Broadly, retail sales are recovering faster in semi-urban and rural areas, which have been relatively less impacted by the spread of COVID-19.

Many regions continue to remain vulnerable due to their limited ability to manage further outbreaks of the virus. Intermittent and sudden lockdowns being re-introduced in some states, such as Uttar Pradesh, Maharashtra and Bihar, are negatively impacting the fragile consumer confidence and spending.

While leading automakers Maruti Suzuki and Hyundai have seen a steady recovery in vehicle production and shipments since the unlocking in May, we believe sustaining the retail sales momentum will be a challenge as pent-up demand winds down. While some states could recover faster, the overall longer-term forecast is that some cities and states will take till the year end to recover annual sales volumes to pre-COVID levels, and some possibly not at all.

Let us look at the performance of some of the key players in the passenger car and two-wheeler categories over the month:

 Passenger cars

 Maruti Suzuki posted a 1% growth, with 100,000 units shipped last month against 101,300 in July 2019.  While marginal, it does signal green shoots of recovery ahead with an almost 50% increase in mainstream hatchbacks — about 17,300 units shipped in July. This also demonstrates growing demand for safer, personal mobility options. In addition, Maruti Suzuki is planning to launch a range of compact SUVs in the second half of 2020, enhancing its offerings in this relatively resilient category.

Hyundai too is moving closer to full recovery, having shipped 38,200 units in July versus 39,000 units last year, a 2% YoY decline but a significant improvement against the 79% YoY decline recorded in June. Hyundai continues to have a strong order book for its refreshed Creta SUV, the newly launched Venue Crossover and, surprisingly, for its updated Verna sedan.

While Mahindra & Mahindra has reported a 35% YoY decline with shipments of 11,000 units last month, we expect sales to improve over the rest of the year. Revival in demand for its vehicles is expected to be sustained in rural and semi-urban areas. The scheduled launch of popular utility model Thar in a refreshed, contemporary and feature-loaded avatar, and in time for the festive season, will provide an additional push.

Counterpoint: COVID-19 India July car sales


India’s, and also the world’s, largest two-wheeler manufacturer Hero MotoCorp has reported a marginal YoY drop of less than 1% in July. It is running at over 95% of its production capacity, signalling a healthy rebound. The company’s July shipments saw 14% sequential growth over June. While the numbers primarily show signs of recovery, they also confirm that supply chain issues, such as the availability of workers and raw material, have been resolved considerably.

Till the COVID-19 pandemic is brought under control, Counterpoint expects the country’s two-wheeler segment to continue to grow much faster than passenger vehicles, being a cost-effective personal mobility solution and also popular among Indian commuters.

Counterpoint: COVID-19 India July two-wheeler scooter sales


Counterpoint believes that while July sales may signal the start of a recovery trajectory, the industry still needs to demonstrate a sustainable demand trend, at least over the medium term. As OEMs continue to resolve challenges with the supply chain and scramble to replenish inventories, they will also need to procure buffer stocks of material to protect themselves against possible future disruptions due to re-introduction or extension of lockdowns.

Counterpoint analysts continue to remain cautious and are holding to their earlier forecast of a 25% decline in all categories in 2020 compared to 2019.

Counterpoint: COVID-19 India automotive vehicle car two wheeler forecast

Author: Vinay Piparsania


Week 17: Car Subscription Services Get COVID-19 Push

The shift towards car subscription services, which started during the last few years, is only going to accelerate during the COVID-19 pandemic. Rising awareness about health among car- buyers is making them consider personal vehicles over public transport, with subscription payment models making vehicle ownership more accessible. This blog analyses the key drivers for subscription-based models and the role of COVID-19 in pushing this shift.

Why Subscription?

  • Automakers are looking for new ways to push sales and make cars more accessible for customers in the wake of COVID-19 pandemic, which has put a lot of strain on their purchasing power.
  • There is a generational shift towards a shared economy where everything from OTT to consumer electronics is being subscribed to. In mobility too, millennials are moving away from car ownership to shared mobility.
  • Rental companies are offering flexible subscriptions ranging from 1 to 36 months and attractive schemes, like extended loan tenure, low down payment, no EMI for a year, return assurance and home delivery, to push sales.
  • During COVID-19, dealers have shifted online to provide a quick, streamlined and hassle-free buying process, thus aiding in subscription sales.

Counterpoint: Key drivers subscription car sales

Automakers Taking Subscription Seriously

Counterpoint: COVID-19 automakers key subscription schemes

While subscription services, including Volvo’s Care, Ford’s Canvas, Cadillac’s Book Porsche Passport and Mercedes-Benz’s Flexperience, were already available, more automakers are focusing on such services during COVID-19:

  • India’s largest car manufacturer Maruti Suzuki has partnered with ORIX to start a pilot subscription model for new cars. Hyundai, the second largest player in the country, started its subscription service in 2019.
  • In March, Nissan launched the ClickMobi car subscription services in Japan. The service is currently available in 23 of Japan’s 47 prefectures. The company plans to expand it to the whole country by September.
  • In January, Toyota launched the Kinto subscription service across Europe. This includes Kinto One, a subscription-based service for new cars.
  • In July, JLR launched the Pivotal vehicle subscription schemes in the UK, offering a six-month subscription starting at $934 a month for a Land Rover Discovery Sport or Range Rover Evoque. JLR expects subscription services to account for 10% of all car sales in the US and Europe by 2025.
  • Volvo, which launched its subscription service Care in 2017, expects it to account for 50% of its revenues by 2025.

 Mushrooming start-ups

Many start-ups, including ZoomCar and Revv, are collaborating with automakers and dealers to provide the software platform, schemes and expertise for subscription-based models. Third-party collaboration is helping automakers and dealers in a fast scale-up of their subscription offers.

  • In July 2020, a London-based car subscription start-up secured €22.6 million in funding. The company provides subscription-based car buying in the UK in partnership with automakers including BMW, VW and Mercedes Benz.
  • Australian start-up Loopit (earlier known as Blinker), which has around 500 dealerships on its software subscription platform, announced 52% increase in dealers wanting to integrate into the platform during the country’s initial lockdown period.


  • In the short term, COVID-19 will accelerate the shift towards subscription models as car buyers refrain from lumpsum payments on big-ticket purchases. The need for privacy and social distancing will also push them towards such services.
  • In the long term, shift towards a shared economy and growing competition from ride-hailing services will continue to encourage automakers to adopt subscription models to push car sales.

Author: Aman Madhok


Week 16: Need for more resilient supply chains

The COVID-19 pandemic has demonstrated how vulnerable automotive supply chains are to disruption, bringing under scrutiny the extended global supply strategies.

The abrupt closure of production centres in China and its domino impact, causing widespread chaos among global auto manufacturers, were felt progressively in Europe, the US, India and South America. Having offshored their manufacturing activities to low-cost countries, many automotive OEMs and suppliers are now scrambling to establish shorter or localised regional supply chains.

The drive to shorten supply chains

Even months before the COVID-19 outbreak, there was a growing interest among global automakers to localize manufacturing of critical components. Trade tensions were at their peak with the escalating tariff war between the US and China, resulting in a broader nationalistic spirit arising in some other countries too. The intensification of protectionism, through targeted financial trade barriers, had become a real and present threat for multinational auto operators to deal with.

With globalized supply chain networks currently programmed for the lowest possible price, most Western companies had set up centralised manufacturing facilities in lower-cost economies, where final products are assembled competitively and shipped to higher-income markets. Automakers, in particular, source parts and electronics from China, mainly because they are cheaper. However, rapid political developments, natural disasters and now the global pandemic have revealed the inherent weakness at the core of such a model of offshore manufacturing. For example, when the pro-Brexit (UK’s decision to leave the European Union) vote was announced in 2016, European auto OEMs and suppliers immediately planned for the worse and rushed to invest in new supply chain resources in the UK. While a change towards more flexibility and multi-level sourcing by the global auto industry had already begun cautiously, the COVID-19 impact has now made it a more definitive and urgent course of action.

Over the next few years, Counterpoint analysts expect to see a broad overhaul of the global automotive supply chain infrastructure based on the following trends:

Globalization to regionalization

Currently, most leading global automakers source 30% to 60% of their parts from China, including modules and sub-assemblies. Given the incredibly high number of parts required – each with different lead times – a return to regional supply chains does present an incredibly complex challenge. However, that challenge is being considered worth taking on by stakeholders for a post-COVID world.

Intending to establish alternative, flexible and adaptable supply chains — while mitigating single-source vulnerabilities – OEMs, component manufacturers and auto sub-system assemblers are now looking to strategically source, assemble and deliver from within their regional borders, and are also reconsidering setting up regional logistic hubs.

Counterpoint: COVID-19 need for resiliant supply chain

 Fundamentally rethinking the supply chain

COVID-19 has exposed the weaknesses of a globalized manufacturing system, necessitating a fundamental rethink of existing supply chain operations. The distributed global business model, being primarily driven by an objective to achieve minimum cost, needs to be resilient. Supply chain models will need to be reconfigured, based on business optimization. Modifying the supply chain as a key business driver and bringing back timely human oversight are some critical factors that can bring inherent agility.

With volatility in production volumes and schedules expected to be a norm, suppliers and logistic operator chains will have to be adaptive, and be able to recover quickly from major natural and man-made catastrophic events such as earthquakes, floods, fires, industrial strikes and social unrest. Human overrides and protocols will need to be re-introduced to bring stability back to the global supply chain during such a crisis. As the current pandemic stress-test has demonstrated, large variances and disruptions cannot be managed through statistical and algorithmic models with such unusual events typically disregarded as “outliers” and overlooked in operational programming.

Resilience through re-shoring — easier said than done

Despite the pain caused by production losses, the business case for increasing supply chain resilience is not straightforward. Reconfiguring and reducing the length and complexity of global supply chains is not without its challenges. Inevitably, short-term costs will be a consideration, as well as the ability to recruit new staff with the requisite skills, knowledge and experience, and access to adequate capital.

With thousands of suppliers involved in a vehicle’s value chain, diversifying suppliers to increase resilience involves significant investments and recurring costs. Automotive components are typically sophisticated, intricately engineered, bulky and also fragile, with high logistics and transport costs. In most countries, government policies encourage sourcing from local producers by achieving a local content threshold to qualify for reduced import tariffs. However, even if such suppliers are considered as alternatives, they are required to be tooled, trained and resourced to produce to specifications and quality standards.

Nonetheless, the benefits of shortening supply chains are considerable, specifically greater security and increased resilience to causes of disruption. Although COVID-19 has brought these into focus, it is not the only risk to established OEMs. There is the ever-present threat caused by natural and man-made events, the ongoing trade disputes and tariff wars between major trading nations, and political instability in regions that supply critical raw materials, combined with a rise of nationalism and protectionism around the world.

The current configuration of international supply chains relies predominantly on low trade barriers and assurances that they will remain for a reasonable time period.  Unfortunately, the devasting economic impact of COVID-19 has led to a resurgence of protectionist sentiments in most countries, and a highly probable threat of such benign policies being withdrawn. Further, the economic arguments for offshoring are not as persuasive as they used to be, with average wages in China’s manufacturing sector, for example, having increased over countries such Brazil or Mexico

There could be many other significant factors behind re-shoring decisions too, such as access to qualified personnel, skills, technology and innovation. Proximity to primary markets is another key consideration, as well as improved quality. OEMs look for quality at the most competitive cost. One of the advantages of working with local suppliers is their ability, if set up correctly, to deliver both. Working with localised suppliers also reduces challenges associated with communicating across multiple time zones, languages and cultures.

Among the deciding factors will be the types of components or aggregates being produced, along with market demand, speed of response and ability to supply custom-engineered solutions with short lead-times.


The sheer number of suppliers to the automotive industry, who are currently clustered in specific regions of the world, present major obstacles to diversifying risks. Reducing or expanding the number of suppliers is not necessarily the only way to configure resilient supply chains.

Counterpoint Research believes that ultimately we will see a combination of traditional extended supply chain models with a growing alternative network of short and localised supply chains. The latter network will most likely be established in alliance with specialised suppliers that can deliver components and services, and have the capability to adapt resiliently to changes in market conditions.

Author: Vinay Piparsania


Week 15: Financial Crunch to Promote Alliances in Auto Industry

With most automakers remaining certain about their shift towards emerging mobility options, strategic partnerships and alliances can ensure their leap forward while maintaining a competitive advantage in these disruptive times.

Mobility options involving electric and autonomous vehicles require billions of dollars in investment. With automakers currently facing a severe financial crunch, the need for partnerships and alliances has become more relevant and urgent.

Below are some recent developments and measures taken by global automakers to ensure liquidity to manage their day-to-day operations:

  • Daimler recently secured US$13 billion credit line from banks.
  • Ford secured US$15 billion from existing credit lines and $8 billion from unsecured bonds.
  • Volkswagen has announced losing US$2.2 billion per week due to plant shutdowns.
  • French government will provide US$8 billion (EUR7-billion) bailout to PSA and Renault.

With the financial crunch leading to automakers and suppliers re-allocating capital funds to manage operations in the short term, Counterpoint expects investments to recover slowly post-COVID-19 and after operations become stable again. The table below ranks different strategic mobility opportunities in terms of their short-term investment potential, with comments on the probable partnership/alliance outcomes.

Counterpoint: COVID-19 new mobility investments

Electric cars

Investment drivers

With the automotive industry being a key GDP driver in many countries, governments will look at promoting EVs to meet their overall emission targets (Paris agreement) on the one hand while driving economic recovery and employment on the other.

Partnership scenario

A key area of partnerships includes EV batteries.

  • Securing supplies: Automakers will need to ensure their battery supplies are secured by partnering with large-scale global battery companies like CATL and LG Chem.
  • Saving R&D costs: Automakers will consider partnering with battery companies to develop energy storage technologies, saving or sharing costs.


Investment drivers

  • Social distancing: Car buyers are preferring connectivity services like over-the-air (OTA) updates, predictive maintenance and touchless transactions, and looking to restrict their visits to service centres to maintain social distancing.
  • New revenue avenues: OEMs are looking at value added connected services as an important area for generating additional revenues and shoring up profit margins amid declining vehicle sales.

Partnership scenario

There will be increasing partnerships across the ecosystem and supply chain — between automakers, telecom operators (to provide connectivity, subscription plans), TCU players (to provide the hardware) and software companies (to develop apps)

Shared mobility

Investment drivers

  • Work-from-home options to employees are expected to become permanent for many companies moving forward, potentially leading to a surge in short-distance travel
  • Amid the economic downturn, choices for last-mile and personal transportation will need to be economical. Hiring e-scooters, e-bikes and kickboards comes at a significantly lower cost when compared to owning a personal vehicle.
  • Maintenance of social distancing is encouraging people to avoid public transport, boosting take-up of shared e-scooters and e-bikes.

Partnership scenario

  • Acquisitions: There are more chances of acquisitions rather than partnerships in this market. With cashflows for small and medium companies remaining stressed, they are suitable targets for acquisition by big companies like Amazon at lower than the valuation price. Intel’s recent acquisition of Moovit, a mobility-as-a-service (MaaS) provider, for $900 million signals the possibility of similar acquisitions in the sector.

Autonomous vehicles

Investment drivers

Partnership scenario

  • There will be relatively fewer alliances (at least in the short term and compared to 2019) among stakeholders for advance autonomy (Level3+) as automakers try to invest in technologies with relatively faster RoI, and avoid cost on new technologies which are not proven and riskier to invest in.


While COVID-19 will delay immediate investments in new mobility, market drivers will continue to encourage investments in the long term.

Alliances and partnerships will become important tools for automakers to gain a competitive advantage. However, the nature of alliances will vary for each mobility type.

Author: Aman Madhok


Week 14: June Update – Global passenger vehicle demand to decline over 20% this year

COVID-19 continues to have a profound impact on the global passenger vehicle (PV) industry. As markets around the world move into H2, there are some varied signs of recovery visible, as well as of further turbulence ahead. Uncertainties remain, with COVID-19 infections rising in several countries of Asia and South America, and, most alarmingly, in the US.

Even as China was showing encouraging signs of a possible V-shaped recovery, June sales slipped significantly, indicating a bumpy ride ahead. The US industry too, despite having turned in some encouraging numbers in May, retreated last month. Europe, the UK and India remained sluggish and stuttering, with sales volumes expected to be under last year’s by over 25%, while South Korea remains a bright spot, tracking ahead on a year to date basis in June.

With the risk of further virus spread and preventive lockdowns remaining high over the rest of the year, Counterpoint analysts continue to remain cautious in holding to their earlier PV global sales forecast.


Based on recent numbers released by the China Passenger Car Association (CPCA), sales in China have significantly dropped in June, despite encouraging recovery trends demonstrated over May and April. Passenger vehicle sales came in around 1.68 million units in June, a 6.5% YoY decline. May sales had risen over 12% YoY to 2.1 million vehicles, and almost 4.5% YoY to 2 million vehicles in April.

The June decline is a setback for an industry expecting to see a rebound in demand with the pandemic having been brought under control in the country, and showrooms and retail markets reopening for business. Evidently, the auto industry’s long-term dependency on a broader economic recovery in China and on overcoming already established consumer mobility trends, such as preferring ride-hailing options and putting off purchase decisions, remains.

Sales of new-energy vehicles (NEVs), including electric cars, also continue to decline. NEV sales in June fell 35% YoY to 85,600 units, following a drop of 26% in May and 30% in April. After growing rapidly for several years, electric car sales have lost momentum, with the government rolling back subsidies in mid-2019 and prevailing lower oil prices making typical internal combustion engine (ICE)-powered vehicles more economical to operate. Electric vehicles (EVs), however, remain a priority for China and authorities are considering fresh stimulus measures to support their recovery.

Bucking the trend, Tesla accounted for nearly 23% share of electric car sales in June. The American company, which started production at its greenfield Shanghai factory at the beginning of the year, has rapidly achieved market leadership and boosted monthly EV registrations in China. Counterpoint analysts are monitoring Tesla’s rise in China and the impact its operations and popularity are having on other domestic EV manufacturers.

 United States

In June, COVID-19 cases saw a spike in some key US states, including California, Texas and Florida, triggering fresh curbs on movement of citizens and resulting in some strong headwinds for the country’s PV sales. With more social restrictions and lockdowns likely to be introduced over the weeks ahead, recovery prospects for the US remain fragile.

Counterpoint analysts are holding to their earlier forecast of an over 24% annual decline for 2020, at around 13.4 million units.

On a positive note, Tesla’s market capitalisation now exceeds Toyota’s, making it the most valued carmaker in the world and underscoring its sustained global EV sales momentum over the pandemic period.


In Europe, we are beginning to see some improvement in vehicle markets, propped by a combination of pent-up demand and various government subsidy programmes encouraging drivers to trade in older cars for new ones. In France, car sales rose for the first time this year in June, recovering by 1.2% YoY to just under 234,000 units. Following France, Germany and Spain too have introduced similar incentives for their auto industries.

The UK car industry has also demonstrated signs of improvement in June, boosted by the reopening of more showrooms. According to reports of the Society of Motor Manufacturers and Traders (SMMT), June registrations fell 35% YoY to 145,377, an improvement over prior months when YoY demand fell by 89% in May, 97% in April and close to 45% in March. While car showrooms in England reopened at the beginning of June, dealers in Wales and Scotland were allowed to do so only from near the month end.

Notwithstanding the signs of a small rebound, Counterpoint analysts remain cautious. European and UK consumers are wary about buying high-ticket items like cars, given the uncertainty over the economy and their job security.

 Rest of World

South Korea remains a bright spot in Asia, with domestic production and sales rebounding in June by over 41% YoY to 176,468 units.

In India, while leading automakers like Maruti Suzuki, Hyundai and Mahindra ramp up production and demonstrate incremental wholesale shipments month on month, sales remain a far distance from the pre-COVID-19 levels. June wholesale volumes for each of these automakers show an over 50% YoY decline. While PV production schedules for July may be higher, disruptions to the supply chain on account of COVID-19 induced restrictions and manpower availability continue to challenge their manufacturing stability. On the other hand, tractor and two-wheeler sales have seen a sharp recovery in June, led primarily by rising rural demand and resumption of movement of goods following progressive easing of lockdowns across the country.

Revised Global Automotive Outlook

While some varied signs of recovery have begun to emerge in June, Counterpoint Research remains cautious and is holding to its earlier global automotive sales outlook of around 72 million units for 2020, a 20.1% decline from 2019.

Counterpoint: COVID-19 impact on global automotive market

Author: Vinay Piparsania


Week 13: COVID-19 Impact on EVs


Counterpoint expects electric vehicles (EVs) to weather the pandemic storm better than the conventional vehicles due to the commitment of governments to meet their overall emission targets. The impact of the pandemic in 2020 will differ across regions. China will recover the fastest due to its control on pandemic spread and pro-EV policies. In longer term, the impact of the pandemic will be minimal and EV sales will be driven by government regulations and incentives. Despite slower recovery in Europe, the investment in the region is expected to remain strong in the long term, driven by strong regulatory tailwinds. Long-term demand in the US will be the lowest if the emission norms remain lenient and the oil prices remain low.

United States

The COVID-19 impact on the US EV market has been limited due to strong sales of Tesla during Q1 2020. Plant shutdowns during the March-May period have started making impact on all OEMs including Tesla, which reported 5% YoY decline in deliveries during Q2 2020.

The EV sales in the US will be hit hard by COVID-19 and see a slower growth in the coming years:

  1. In January 2020, the administration rejected GM’s and Tesla’s plea seeking extension of the $7,500 tax credit qualification to cover three times the initial 200,000-EV threshold per automaker. The government did not increase the threshold. On the contrary, it reduced the tax credit to $7,000.
  2. Protracted legal battles between Zero Emission Vehicle (ZEV) states and the central government will continue to adversely impact EV sales in the US, at least for the next couple of years. Cash-strapped automakers will be encouraged to invest in profitable vehicles like gasoline trucks and SUVs.
  3. Low crude oil prices (which fell to -US$37.6 in April) will encourage car buyers to stick to gas fuelled cars.


Chinese government has taken positive steps in 2020 to revive the demand for new-energy vehicles (NEVs). It is expected that the government will continue to support NEVs with sales mandates and subsidies driving the market.

  1. In April 2020, China scrapped vehicle purchase tax on NEVs, effective in 2021 and 2022, and broadened the scope of the exemptions to include all NEVs.
  2. The NEV subsidies were supposed to end this year. However, during the same month, the government announced to extend the subsides to 2022, with a slower phase-out pace.

NEV sales during the January-May period crossed 260,000 vehicles, declining 44% from last year. However, sales decline continues to drop with each passing month as the pent-up demand is released and business activities comes to normal. Counterpoint expects a strong H2 2020 for EV sales in the country compensating for the demand lost during H1 2020.


The European car sales increased around 90% during January-April 2020 compared to last year due to following reasons:

  1. 2020 is the target year for EU CO2 emission standards to limit average CO2 emissions per kilometre per new car sold
  2. Germany increased the EV subsidies in February, boosting demand in the region
  3. Italy’s move to introduce incentives worth €60 million in 2019 and €70 million in 2020 and 2021 started to have its impact on sales

The impact of the pandemic will be diluted during rest of the year as OEMs focus on meeting their emission targets. It is likely that the governments will respond to the pandemic by increasing subsidies and incentives for EVs to meet emission targets, boost economic growth and generate more jobs. The proposed US$22.6 billion (€20 billion) package for two years for clean vehicles, with 2 million electric and hydrogen vehicle charging stations to be installed by 2025, is a step in this direction.

Counterpoint: COVID19 Impact on EV sales

Author: Aman Madhok


Week 12: Micro mobility – Silver linings amidst the pandemic?


Micro mobility globally has been severely impacted by COVID-19 with lockdowns resulting in reduced ridership. The road to recovery is a tough one, but Counterpoint believes micro-mobility will be the biggest beneficiary from COVID-19 among all forms of shared mobility.

Citizens and governments in many cities are becoming increasingly aware of the benefits of micro-mobility, and companies should prepare for coming opportunities to not only survive, but to grow over the long term.

Counterpoint: COVID19 Impact on Micromobility

Key indicators showing potential for rebound as lockdowns ease:

  • Changing customer preferences – businesses are realising productivity is not an issue. In fact, it has increased in some cases as employees work from home. This is expected to become permanent for many companies moving forward, leading to a surge in short distance travel. People are more likely to choose quick and eco-friendly e-bikes and e-scooters as they travel short distances around their home rather than taking long commutes.
  • Amidst the economic downturn, choices for last mile and personal transportation will need to be economical. E-scooters, e-bikes and kickboards are significantly cheaper than owning a car.
  • Concerns around social distancing will encourage people to avoid public transport, boosting take up of shared e-scooters and e-bikes. In China, bike share operators like Hellobike, Mobike and Didi Chuxing are seeing good growth after easing of lockdowns, as people reduce dependence on public transport.
  • Lockdowns have resulted in less pollution, increasing environmental consciousness amongst the general public. This is expected to benefit the sector in near future. Indeed, high pollution levels in many Chinese cities have boosted the profile of the sector, making bicycles and e-bikes an important mode of last mile transport.

Government support

To aid social distancing, governments are considering infrastructure investments to help the micro-mobility sector to grow.

  • The UK government is urging people to avoid public transport and instead use private vehicles, bicycles, or walk. It has announced an initial £250m (US$306m) emergency active travel fund (the first stage of a £2bn investment commitment) for EVs, cycling and walking infrastructure. Buildout of E-scooter trails in the country will be brought forward to 2020 from 2021. Pop-up bike lanes, wider pavements and safe junctions will be a part of the fund. £10m (US$12.2m) from the fund will be committed to street EV charging infrastructure.
  • Bogotá, Colombia has added 47 miles of cycling lanes to accommodate more riders and aid in social distancing. Cities such as Mexico City and London are benefiting from the current cycling infrastructure.
  • Other cities have blocked some roads to traffic, providing more space for pedestrians and facilitate social distancing. For instance, Oakland, California has restricted traffic on 74 miles, or 10%, of its roads, helping pedestrians and cyclists keep at least six feet apart.

Green shoots

As lockdowns ease, some e-bike companies are already seeing an increase in demand.

  • E-bike maker Vanmoof, which secured funding of $13.5m in May 2020, saw sales increasing 48% YoY during Feb-March period, and over 20% for the Jan-May period.
  • UK-based foldable bike manufacturer Brompton announced its online sales increased five-fold since the launch of the ‘Direct To Home’ service from the start of April.
  • E-bike sales in Germany have seen a significant increase from April with the easing of lockdowns, creating a shortage of e-bikes in many cities.


  • The global micro-mobility market recovery will likely start in 2021, or as we see stabilization in COVID-19 cases. A second wave of infections could delay the recovery further.
  • Most micro-mobility companies are relatively small and localized start-ups, with many already seeing losses before the pandemic started. The market will see consolidation as cashflow continues to tighten. Intel’s recent acquisition of Moovit, a mobility-as-a-service (MaaS) provider, for US$900 million signals the possibility of similar acquisitions in the sector.
  • E-bikes, e-scooters and kickboards are still illegal for travel on roads in many cities. Further, there is a lack of standardization for these types of vehicles.


  • Governments can play a pivotal role in the adoption of micro-mobility. The recovery will vary from country to country depending on favorable government policies, subsidies and infrastructure development.
  • Measures such as self-sanitizing handlebars, onboard sanitizers and periodic cleaning of vehicle fleets will become important to attract riders.
  • Innovative schemes and discounts can help micro-mobility companies through the tough times. For instance, two-wheeler sharing company Bounce is offering its bikes on a weekly and monthly subscription basis.

Utilization of existing vehicle fleets into logistics and food delivery can open up new revenue streams for micro-mobility companies. For instance, two-wheeler sharing company Rapido is looking to earn 25% of its revenues from logistics moving forward.

Author: Aman Madhok


Week 11: US May sales – Is the worst over?

Actual passenger vehicle (PV) sales reported for the US in May suggest the domestic auto industry could be on its way to recovery.

Reported May sales for PVs and light trucks came in at around 1.1m units, down 33% YoY but an improvement over April and March’s respective 45% and 38% declines. Further, breaking the 1m monthly mark for the first time this year, May volumes showed significant improvement over the 350,000 units sold in April, with light trucks being a bright spot.

US auto sales on the rebound

May is traditionally a critical month for the US auto industry as it marks the beginning of the summer sales season. With almost all states having eased COVID-19 restrictions, most automakers in the country have reported sales rebounds during May.

Monthly sales declined over 30% YoY for General Motors, Ford, and FCA. Leading Korean carmaker Hyundai saw a 13% YoY decline, a 5% pt improvement from April. Honda saw a May YoY sales drop of 17%, with trucks performing much better than cars – down 10%  and 25%, respectively. Toyota reported a YoY sales decline of 26%, May’s unit sales were almost double that of April, which fell 56% YoY.

It is possible April could be the low point in a possible V-shaped recovery, with states re-opening and dealerships returning in May. The month has shown significant sales improvement and recovery, highlighting pent-up demand. As well, extraordinary promotional offers by dealers and automakers alike have brought consumers back to showrooms and encouraged buying.

Counterpoint believes that May’s sales pace, while lower than last year, is indeed the start of recovery for the industry. Automakers are already scrambling to replenish inventories as customers return to showrooms. However, there is still a long road ahead, and we will continue to track the market over the coming weeks.

Production hiccups stalling assembly lines

As many states across the country eased shelter-in-place restrictions during the month, May also brought attempts by auto OEMS looking to return to normalcy with restarts at their assembly plants.

However, supply chain issues continued to plague production lines at major auto plants, as they faced problems from suppliers in Mexico. While most plants in the US and Canada restarted by mid-May, most manufacturers in Mexico had not resumed operations even by the end of the month. Given the inter-dependency of the North American automotive supply chain, most plants in the US continue to face parts shortages, resulting in sporadic production operations. It may still be a few months before we see some stability.

Counterpoint estimates prolonged plant/supplier shutdowns have resulted in the loss of nearly 3m units of vehicle production in H1. Anticipating slower line-speeds and reduced demand over Q3 and Q4, we expect full-year 2020 output losses to increase to over 3.5m units, a 22% decline from last year.

In any case, with automakers already concerned about record low inventories at dealerships, carmakers have been looking to continue working over normally planned shutdowns in summer.

Keen on riding the wave in customer demand, especially for light trucks, General Motors has called off its traditional two-week summer shutdown and will continue to produce vehicles at most of its North American plants.

Similarly, Ford Motor Company has shared that most of its US assembly plants will be reducing their annual summer shutdowns to one week.

As well, most other auto OEMs are considering deferring annual summer breaks to later in the year.

Sales recovery to hit headwinds?

The question going forward is whether recovery signs will continue into June and further out.

While recent trends suggest sales are showing steady gains and automotive manufacturing in North America is gradually coming back on stream, there is also the possibility of a resurgence of the virus bringing further economic headwinds.

However, Counterpoint continues to maintain its current outlook for the US auto PV and light trucks market at a base case estimate of almost 13.4m units in 2020, marking a 24% YoY contraction.

Exhibit 1: US Vehicle Sales,’000 units

Counterpoint: Coronavirus Pandemic Impact on US Automotive Industry

Author: Vinay Piparsania


Week 10: Changing consumer behaviors and how mobility companies can adapt

The pandemic is affecting most sectors of the economy, especially shared and smart mobility operators. Public-transport usage in major cities has declined anywhere from 70 – 90% of normal loads, and operators are now required to follow strict protocols like requiring face coverings, temperature scans and limiting the number of riders in trains and buses to ensure social distancing.

Similarly, ride-hailing mobility usage has plummeted dramatically, with several players suspending services during lockdowns. In the US, demand for Uber and Lyft fell by over 80% in April from pre-COVID levels.

Over the long term, the outbreak will have lasting impacts on shared mobility as the pandemic alters the economic, regulatory, and technology environment, as well as changing consumer behaviour.

Changes in consumer behavior and preferences

Mobility is an essential aspect of our lives, but how we get around in the future could be significantly different in the post-COVID world. Social distancing is the most significant driver of change in this new environment, with people rethinking their transport modes to avoid the risk of infection. Recent trends in China’s major cities are demonstrating that as bus and subway ridership drops, private cars, walking, and biking are gaining in popularity.

Personal vehicle use may be the winner in the short term, and app-based ride-hailing aggregators are seeing a dramatic decrease in consumers using their services as remote working becomes the norm.

Further demands are being made on share-car drivers and their companies to take responsibility for keeping vehicles clean and virus free. To adapt, mobility industry players are adjusting their tactics, with leading companies focusing on various strategies.


Lyft, which announced cuts and furloughs affecting hundreds in May, stated that rides on its platform in the US reached only 25% of pre-COVID levels during the month, with consumers slowly coming back in cities where lockdown restrictions were eased. Lyft drivers are now required to self-certify within their app of wearing a facemask before they are allowed to pick up passengers.


While the global number for June trip requests are picking up as several countries ease restrictions, rides are still significantly below last year’s levels. In an attempt to improve profitability, Uber has remained focused on its core businesses of ride-hailing and food delivery, and also announced cuts to its workforce. Uber also introduced a new feature requiring drivers to take a selfie of themselves wearing a facemask before logging onto the company’s network. Uber has also been providing disinfectant sprays to drivers, encouraging them to sanitize their cars regularly.

Didi Chuxing

With cities in China now officially re-opened for business, Didi Chuxing, the country’s largest ride-hailing app, is seeing ride-sharing demand coming back to levels similar to last year.  Since May, Didi has been using AI technology to authenticate that its driver-partners are wearing face masks.

Diverse regulatory and policy responses across regions

The current crisis is helping some regions move more quickly towards sustainable mobility, while others are looking to defer or relax regulatory mandates to support depressed automotive industries.

In some markets, incentives such as cash for turning in old cars is driving sustainability through replacement and also encouraging adoption of electric vehicles (EV).  In other regions, like the US and China in particular, regulators have considered relaxing emission targets in support of automakers.

Chinese regulators are also relaxing, at least for now, policies limiting personal vehicle ownership in order to facilitate social distancing. Many governments are also showing interest in dedicating space for pedestrians and cyclists, while some cities like New York are looking to close some streets to vehicular traffic.

Technology development 

Over the short to medium term, the pandemic could delay the development of advanced technologies, such as autonomous driving, as automakers divert research budgets to fund immediate cash requirements. Similarly, investments in micro-mobility and shared-mobility start-ups are expected to fall and could drive market consolidation.

The impact of COVID-19 on EV development will differ across regions. In China, we expect post-COVID EV sales to rebound, with continued investment in development. In Europe, while ramp-up of EVs may be delayed with historically low oil prices, stringent environmental regulatory pressures could remain a counter-balance. In the US, we could see EV demand stagnate should federal emissions regulations be eased and oil prices remain subdued.

Over the long term, however, autonomous vehicles, micro-mobility solutions and other technologies that support physical distancing will benefit. We believe that as the initial crisis subsides, customer demand for these solutions could soar.

How can mobility companies cope?

Even before the pandemic, mobility and automotive start-ups were suffering from slowing growth in major economies. Battered by lockdowns and movement restrictions, ride-hailers around the world have had to resort to cutting jobs and slashing costs.

Looking ahead as the pandemic gradually comes under control, mobility companies will need to look at developing detailed plans to scale up operations, not only focusing on where, but how. A portfolio review aiming to rationalise services can help focus on profitable operations and decide on which technologies are to be prioritised, so to emerge from the crisis leaner and stronger.


Counterpoint believes recent consumer behaviour changes in the mobility space will be temporary, and shared-mobility solutions, including public transit, will rebound. Micro mobility and last-mile solutions, too, will eventually recover, as cleaning and disinfection protocols are practised, with status updated on ride-hailing apps.

Now more than ever, it has become imperative for automakers and mobility operators to review their long-term strategy.

Exhibit 1: COVID-19 Impact to Global Automotive and Shared Mobility IndustryCounterpoint: COVID19 long and short term impact on automotive industry

Author: Vinay Piparsania


Week 9: Poised for a rebound?  May’s mixed signals

As the effects of the pandemic are being brought under control, we are seeing gradual automotive sector recovery, though at varied rates.

With most parts of the world easing lockdowns in May, auto sales have begun to show some signs of improving. Prospects for China, having reopened earlier than most, and the US are looking more positive than for Europe.

In the short term, the global automotive industry appears to be poised for a rebound as manufacturers replenish dealer inventories and meet pent-up demand, especially with many consumers expected to take efforts to avoid public transport and ride-sharing.

Longer-term, however, Counterpoint sees a more gradual recovery, with dampened vehicle sales from Q1 carrying over into Q2. Supply-side issues will also cause problems, with stuttering production schedules from broken supply chains, financially stressed suppliers, and delayed new model launches limiting supply.

With some leading indicators now visible, we have decided to maintain our current 2020 PV forecasts. However, key risk factors of a virus resurgence remain high for some locations, with the possibility of markets going into lockdown again.

Below is our latest outlook, incorporating May sales updates from key global markets.


The first country to be impacted by the virus outbreak, China has been quick to recover from the pandemic, and PV sales are almost back to pre-coronavirus levels of growth. Largely on account of the automotive industry’s effective restart in March, sales and production activity approached normal levels in April, with PV sales up 4.4% YoY to 2.1m units. May saw further improvement, with sales rising 12% YoY to 2.1m vehicles.

Pent-up demand drove steady deliveries in April. This was further supported by government subsidies and intensive promotions and discounts offered by dealers. The momentum continued into May, raising our overall expectations for Q2.

However, domestic and global headwinds remain, and the market still faces a high level of economic uncertainty. Consumer confidence is fragile, with fear of unemployment and income loss dampening high ticket, discretionary purchases.

As a sustained, comprehensive recovery is still to be established, prospects for H2 remain cloudy and we maintain our current forecasts.


May sales are estimated at around 1.1m PVs, down 30% YoY, but an improvement to April and March’s respective declines of 45% and 38%. Easing of restrictions across most of the country helped May pass the one million mark.

Throughout the lockdowns, however, the market did demonstrate some resilience, with significant commercial activity continuing as vehicle sales were categorised an ‘essential service’ by many states.

While American retail consumers are coming out again to look at cars and trucks, facilitated by digital retail tools and appealing discount offers, fleet and commercial category buyers, particularly those in rental cars, are not. This is worrying as new vehicle sales to rental car companies accounted for about 10% of the overall market, or 1.7m vehicles, last year. Bankruptcy filings of Hertz and its parent company Advantage Rent A Car in the last week of May will likely weigh down US auto sales.

We maintain our current outlook for the US, with a 24% YoY contraction expected in 2020.

Europe and the UK

European car sales picked up slightly in May after a disastrous April. In Spain, May sales dropped over 72% to 34,000 units, and to almost half previous year totals in France, Italy and Germany, which saw sales of 96,000, 100,000, and 168,000 units respectively, as partial lockdowns remained. Overall, YoY sales for Western Europe fell over 57% in May, to 556,000 units.

For the UK, new car registrations were down 89% YoY in May, with 20,200 cars registered last month. Despite the drop, the figure marks an almost five times increase over new car registrations in April, when only 4,300 cars were sold. The Tesla Model 3 topped the UK new car sales chart for the second month running, with 850 units delivered, making up nearly 5% of all registrations.

With around half a million new cars registered since the beginning of the year, the overall UK market has halved in the first five months of 2020, compared to almost one million units registered during the same period last year. While showrooms in England have reopened after two months, dealerships in Scotland, Wales, and Northern Ireland are still shut.

Reopening’s have helped sales in Germany, with May sales falling by 50% compared to over 60% in April.

As we look ahead, Counterpoint is paying particular attention to any government announcements around fiscal policy or economic relief programs such as that planned for France and Germany, which are looking to lower VAT. While details will vary by country, recent announcements imply modest levels of incentives can be expected.

Even with some signs of improvement in May, the industry remains in crisis, with various stages of lockdowns expected for some time. Our outlook for Europe remains unchanged – a 26% contraction expected in 2020, with the possibility of a gradual recovery in H2 2020 as consumer sentiment improves with the easing of lockdowns.


After zero sales in April, preliminary shipment data for May suggests only 37,000 units were sent to dealerships, an 85% decline YoY, as the country started to open up gradually during the month.

With auto OEMs and dealerships estimated to be holding nearly 300,000 units of inventory – about two month’s stock based on current projected retailing rates – wholesale shipments over the next few months are expected to be difficult.

Overall consumer sentiment in the country remains weak, mostly because of the economic fallout of a complete nationwide lockdown lasting 50 days, depressing GDP forecasts, and increased caution around car loans. For any significant recovery to happen this year, it is critical that automakers and dealers have operations and consumer offers fully in place as the festive sales season commences during the last quarter of the year.

Our India sales forecast remains unchanged. Our base case outlook sees YoY passenger vehicles declining by 25% to around 2.1m units.


While having been a relative bright spot so far, the Japanese market worsened in May. Sales dropped, nearly 55% YoY to 218,285 vehicles, compared with a 29% YoY decline in April.

Consumer sentiment remained depressed, with expectations of an economic downturn curbing big ticket purchases. Also, the government’s declaration of a state of emergency and stay-at-home advisory, which ran into the Golden Week holiday in late April to early May, severely impacted sales, which normally spike during the annual holiday.

While overall economic activity shows some positive signs of recovery since lifting of restrictions in May, our outlook remains unchanged.

Revised Global Automotive Outlook

While varied signs of recovery began to show in May, Counterpoint Research remains cautious and we leave our earlier global automotive sales outlook unchanged at around 72m units for 2020, a 20.1% decline from 2019.

Exhibit 1: Global Automotive Sales (M units)

COVID19: Impact on Automotive Sales

Note: The nature of the current global health crisis means we cannot rule out further revisions to the global 2020 automotive forecast.

Author: Vinay Piparsania

Week 8: India’s Auto Industry to decline by at least 25% in all categories in 2020

India’s automobile industry, the fourth largest globally by volume, is headed for another year of significant declines as extended lockdowns impact production and consumer demand. Sales volumes of passenger and commercial vehicles are projected to drop to levels not seen in over a decade.

The storm continues

At the beginning of the year, the auto sector was already suffering in the midst of a challenging economy.  Compounding this, more stringent environmental and safety regulations, the growing popularity of shared mobility platforms and cautious lending by banks and non-banking financial companies (NBFCs) negatively impacted vehicle sales. COVID-19 is now making the situation far worse.

Based on data reported by the Society of Indian Automobile Manufacturers (SIAM), March passenger vehicle sales declined 51% YoY to 143,014 units. Sales of two-wheelers fell 40% to 866,849 units, and commercial vehicles declined 88% to 13,027 units. With a nationwide lockdown in effect from the last week of March, the industry saw zero production and sales of new vehicles in April.

Factories and dealerships struggle to resume operations

While automakers began partial operations in May, it has been an uphill struggle. Openings were allowed only after receiving due approvals from respective state authorities, and conditional to following safety protocols such as body temperature scanning, social distancing and ensuring high standards of sanitization.

Shutting down operations was far easier than reopening factories as companies need to manage complex synchronization issues. The resumption of operations requires OEMs to coordinate with hundreds of local and global suppliers, logistics partners and thousands of employees. The biggest challenges come from not having enough workers willing to come back and sufficient and continuous parts supply. It is likely plants across the country will function with a skeleton staff at least until July.

Slow dealership re-openings are another problem, with almost all vehicle sales delivered through them – online sales are a rarity and still under development. As of the last week of May, only 3,500 dealerships were operational around the country, representing 20% of the total network. And amongst these, half were operating only their service departments and not showrooms.

The sharp contraction in sales will also lead to a decline in average manufacturing capacity utilization. For the PV segment, effective annual capacity utilization is projected to drop down to as low as 45%, from 60% a year ago. Two-wheelers and commercial vehicles will drop to below 50% and 35%, respectively, from 65% and 51% a year ago.

Demand outlook for 2020

The lack of government policy intervention for the automotive sector in this year’s national budget and also recent fiscal stimulus packages combined with a lack of visibility around when social and economic demand conditions will get back to normal has resulted in Counterpoint revising our 2020 forecasts. Our base case outlook sees YoY passenger vehicles, two-wheelers, and commercial vehicles declining by 25%, 21% and 28%, respectively. CV sales in particular, have been languishing under the impact of a new axle load norms, and is unlikely to show much recovery this year with freight demand projected to remain low.

Recovery timing

Demand recovery can only be expected around the festive season in the last quarter of the year. With growing consumer preference for cheaper, personal transport, two-wheelers – motorcycles in particular, with their higher rural share – will likely be the first category to see a rebound. Should the government develop scrappage schemes and lower interest rates for vehicle loans, along with reduction in sales and road taxes, as seen across SE Asia, these interventions could accelerate recovery.

Despite the above challenges, we remain positive longer term in view of India’s comparatively low vehicle penetration – 110 two-wheelers and 32 cars per 1,000 – Australia has 740, Japan has 591 and China has 164 vehicles per 1,000 individuals. We expect recovery post-2022, helped by improvement in non-banking financial institutions and the overall economy. Combined with a young population, rapid improvements in road infrastructure, growth in rural demand and possible introduction of entry-level passenger cars, this could significantly boost consumer demand.

Exhibit 1: Key Factors Affecting the Market

Counterpoint: COVID19 Key Factors Impacting Indian Automotive Industry


Exhibit 2: India Vehicle Shipments1 (in Million Units)

Counterpoint: COVID19 Growth Rate of Indian Automotive Industry; Cars, Two-Wheelers and Commercial Vehicles

Note: The nature of the current global health crisis means we cannot rule out further revisions to the global 2020 automotive forecast.

Author: Vinay Piparsania

Week 7: Southeast Asia Pressure Points

As the world continues to deal with COVID-19, economies are moving into recession. The automotive sector, with its large-scale production and tightly interconnected global supply chain, remains the worst impacted.

This week we focus on the impact to Southeast Asia, with ASEAN representing the fifth-largest auto market cluster in the world.

Lockdown measures introduced mid-March

Like many others, most ASEAN countries underestimated the risk of outbreak at the start of the year, with governments doubtful on it becoming a pandemic. Remaining tentative on diverting resources to public health, most ASEAN countries waited, introducing lockdown measures only around mid-March. As a result, key economic sectors in the region remained, for the most part, unaffected by the outbreak before this time – this included international travel, tourism, and export dependant businesses.

However, as the crisis erupted and lockdowns ensued, millions across the region rapidly began losing jobs as business came to a standstill. As immediate countermeasures, central banks across the region introduced rate cuts and easier lending terms to ensure liquidity. Governments also announced fiscal support measures including direct disbursement, soft loans, and tax cuts to mitigate the impact of the potential economic crisis.

The auto sector has been hit hard, with overall Q1 vehicle sales in ASEAN5 (Indonesia, Malaysia, Philippines, Thailand, and Vietnam) falling to 683,000 – levels not seen in nearly a decade.

Declines for the month of March are the most revealing, with new vehicle sales plummeting around 40% YoY across ASEAN, and auto OEMs selling only 197,000 vehicles – this compared to 328,000 a year earlier. We expect April to be worse, with auto production remaining shut across the region last month and economic damage possibly worse than the 1998 Asian financial crisis.

Significant revisions to our Indonesia, Thailand, and Malaysia Automotive Outlook

Economic growth in the region was already slowing down due to US-China trade tensions, and lockdowns have only exacerbated the situation – especially in Thailand and Malaysia. The extent and duration of distancing measures have been severe, and we have reviewed our FY 2020 outlook in this updated context.


In Indonesia, SE Asia’s largest auto market by volume, vehicle sales saw a comparatively moderate Q1 decline of 7% YoY to 237,000 units, with negative lockdown effects mitigated by a mid-March rollout. Though skeptical early on, the government eventually announced a partial lockdown on March 18, allowing only essential businesses such as food, healthcare, banking, and utilities to operate; as a result, vehicle sales for the month dropped 15% YoY to 77,000 vehicles.

With the full effect of shutdowns to be felt in the weeks ahead, we project steeper YoY vehicle declines from April onwards. And with a recession imminent, Counterpoint estimates this year’s auto demand to fall 36% to 603,000 units.


One of the region’s largest markets, Thailand reported Q1 sales of 200,000 units, a YoY decline of 24% after an especially bad March, which saw a 42% YoY plunge to 60,000 units. This has worsened the shrinking market, which took a U-turn in 2H19 after two straight years of strong growth.

With a prolonged lockdown, Counterpoint expects broad-based economic challenges resulting in a 2020 GDP decline of -5.5%, the worst drop since the 1998 Asian financial crisis. We have revised this year’s outlook accordingly, and estimate new vehicle sales of 745,000 units, a 28% annual decline.


Malaysia was one of the worst-performing markets in the region with Q1 sales falling by over 26% to 106,000 units. The government implemented its Movement Control Order (MCO) from mid-March, prohibiting all interstate and international travel, and sales of non-essential items including automobiles. Sales plunged by almost 60% in March to around 22,000 units. With no new vehicle production and all dealers in the country closed, zero vehicle sales have been reported for April.

While Malaysia has begun to ease lockdowns, allowing resumption of partial manufacturing operations, restrictions on reaching full capacity at automotive plants remain in place until June 9. Counterpoint estimates Malaysia’s vehicle market this year to fall by over 29% to 426,000 units.

The Philippines and Vietnam

The Philippine market is fell in Q1 by over 16% YoY to 90,000 units, with the impact of the pandemic becoming evident only in March when the government began mid-month to lockdown the country’s most populace regions. We expect the full effect of the pandemic to become more apparent from April.

Vietnam was the region’s worst-performing market during the quarter, with sales estimated to have dropped around 32% YoY to 50,000 units. Its comparatively bad performance was due to Vietnamese authorities in February taking an earlier stand to contain the spread of the virus. Recently on May 20, the Vietnamese government, in a move to stimulate automotive demand, has approved plans to reduce vehicle registration fees by 50% till the end of the year.

2020 ASEAN vehicle sales outlook

We have revised our overall vehicle sales projections for 2020 and now estimate a YoY decline of 30% to 2.3m units, with country breakdowns as follows:

Exhibit 1: ASEAN5 Vehicle Sales, Q12019 & Q12020, ‘000 Units

Counterpoint: COVID19 ASEAN Automotive Sales


Exhibit 2: ASEAN5 Vehicle Sales, 2016-2020E, ‘000 Units

Counterpoint; COVID19 ASEAN Annual Vehicle Sales

Note: The nature of the current global health crisis means we cannot rule out further revisions to the global 2020 automotive forecast.

Author: Vinay Piparsania

Week 6: Challenges in Syncing Supply Chain

As the COVID-19 pandemic broke out in China at the beginning of the year, vulnerabilities in the global automotive supply chain were exposed with nearly 85% of the world’s supplies dependent on China in some way or another. The ripple effect was felt globally, and most auto manufacturing came to a sudden halt as lockdowns shut plants.

Even before the pandemic, the industry was stressed financially from increased emissions-related upgrade costs and increased R&D investments in emerging technologies. As manufacturing operations resume, the added burden of COVID-19 safety protocol compliance, plummeting demand, and inefficiencies from underutilized capacity are further exposing OEMS and suppliers to severe liquidity issues. Further disruptions are likely to continue, bringing the possibility of major consequences to specific segments of the auto ecosystem.

Most regions remain vulnerable, and Counterpoint expects substantial volume drops in 2020. For example, in the major markets of North America and Europe, we expect base case sales of 13.4m and 13.6m, a YoY decline of 24.1 % and 25.7%, respectively.

Below is our analysis around April updates from key global markets.


China’s April auto sales were up 4.4% YoY to 2.07m units, as reported by China’s Association of Automobile Manufacturers (CAAM). February and March saw MoM declines of 79% and 43%, respectively. With April having apparently turned the corner with an MoM increase, we expect the trend to continue over at least the next two months with potential pent-up demand being fulfilled.  However, even as China is now in recovery mode, CAAM expects auto sales to drop 15% in 2020 to 21.3m units. This is in-line with Counterpoint’s recently downgraded forecasts.


While US passenger vehicle demand tanked over the past few months, April sales slightly exceeded our expectations falling 46% YoY versus our estimate of a 50% decline. While a catastrophic hit in any other year, the number does offer a glimmer of hope, especially in the context of states and local governments lifting restrictions at manufacturing facilities, dealers opening their doors, and online channels continuing to engage with customers.

Adhering to new safety norms, i.e. frequent plant sanitization, wearing of face masks, and temperature checks upon entry – Daimler and Hyundai have resumed production at their Alabama plants in the last week of April. The UAW union has also given a go-ahead for its members of the Detroit 3 (GM, Ford, and FCA) to return to work. Other automakers plan to follow similar protocols, including modifying layouts and floor plans of manufacturing sites to have fewer workers at each work station. All these additional safety measures will limit the pace of ramp-up and eventual production line rates. While parts inventory may theoretically be available – with WIP material already in place before the shutdown – it will take time to rebuild and stabilize the supply chain, with component suppliers needing to implement safety measures at their facilities too.

May should mark the start of a gradual recovery in US output, although volumes for the month are still projected to decline by 65% YoY. Even with all plants back online, subdued demand will result in lower production volumes. As a result, we expect 2020 passenger vehicle sales to remain 24% below last year.

Europe and the UK

With lockdown measures in place since mid-March, some markets have registered almost no registrations in April. France’s sales fell by 88% last month, while sales in Italy plunged 98%.

New car sales in the UK fell 97% as dealerships remained shut. Interestingly, the month’s top-selling brand, typically dominated by traditional automakers such as Ford, Volkswagen, and Vauxhall – was the Tesla Model 3, selling 658 units, outselling the next two best-sellers combined (Jaguar I-Pace and Vauxhall Corsa at 367 and 264, respectively). Overall, however, the numbers were very small when compared to a year earlier, when Ford’s Fiesta topped the list with 5,606 registrations. In possibly a sign of changing times, Tesla’s online sales system, with buyers pre-ordering their cars and being directly delivered with a contactless handover, may have just given it the edge. Britain’s biggest car factory, operated by Nissan in Sunderland, will not resume production until June.

Overall, Western European registrations fell 80% YoY in April, compared with April 2019, and we expect the declining trend to continue through at least the next six months with risks remaining high on growing unemployment and soaring government debt, as well as the possibility of virus cases picking up as lockdowns are lifted.


With the lockdown of all showrooms and manufacturing facilities, the Indian auto industry saw zero production and sales in passenger and commercial vehicles (PVs and CVs) in April, which followed March’s 50% and 88% drop in PVs and CVs, respectively.

The largest carmaker in India, Maruti Suzuki, only managed export shipments of 632 units during the month with port operations having been partially resumed. Similarly, exports of Hyundai and Mahindra stood at 1,341 and 733 units respectively last month, while having reported zero domestic production and sales. Compared to April 2019, when the country reported total PV sales at around 320,000 and exports at 56,800 units, the current lockdown will surely leave some deep economic wounds. With the partial opening of a few plants allowed from last week subject to strict safety and social distancing protocols, every auto manufacturer is working with dealers and supplier partners to rebuild the ecosystem.

With no clear definitive indication of when the social and economic conditions in the country will get back to normal, Counterpoint is holding to its base case scenario of 20% YoY decline in auto sales, and revising the worst-case outlook to a 35% YoY decline should the GDP growth outlook become negative.


South Korea remains the industry bright spot as the country continues to be successful in managing the pandemic domestically. Sales increased 8.3% YoY in April, a second consecutive month of YoY growth. However, a recent resurgence of some new coronavirus cases may be a growing concern.

There continues to be an increased risk that global passenger vehicle demand could drop to 70m or below if the current economic recession becomes further entrenched or a second significant wave of the virus occurs post-lockdown. While economic interventions and industry incentives could have a big impact on reversing demand declines – as we saw with scrappage schemes implemented during the 2008 financial crisis in North America – the success of any stimulus package will depend on the quantum of financial support from governments, the duration of such initiatives, and qualifying criteria for consumers.

Revised Global Automotive Outlook

The scale of distress to the automotive supply chain in the current crisis is unprecedented. A general lack of visibility, particularly on the lower tiers of the supply chain, means the weakest links will inevitably be revealed as production restarts and companies scramble to secure components. The most financially vulnerable are the smaller tier 2 and 3 suppliers, specialist tooling suppliers, and some logistics providers. As a result, our global 2020 base case sales growth estimate is around -20%.

As current FG stocks near depletion, future production planning will need to be revised to the new normal of lower demand. Although the adage ‘with every crisis there is an opportunity’ still rings true, things will be especially tough as the industry right-sizes and become leaner.

With efforts initiated by automakers and suppliers to consolidate, Counterpoint’s outlook remains cautious. Keeping in mind production already lost, the challenges in returning to work and the risk of prolonged low-capacity utilization from subdued demand, our revised global passenger vehicles sales outlook is around 72m units for 2020.

Exhibit 1: Impact of COVID19 on Global Automotive SalesCounterpoint:COVID19 Impact on Automotive Sales

Note: The nature of the current global health crisis means we cannot rule out further revisions to the global 2020 automotive forecast.

Author: Vinay Piparsania

Week 5: Digital Auto Retailing to Become More Widespread


Car sales have traditionally been a single, decentralised sales channel, i.e. automakers/importers sell cars to dealers, and dealers to consumers; COVID-19 is shifting some of this dynamic towards digital.

We have recently seen dealers ramping up their websites to help buyers select desired models, process payments and complete related paperwork.

Mercedes Benz has plans to convert 25% of its sales online by 2025, and long term, it is possible some automakers may adopt a Tesla-like business model by going fully online and removing the dealership from the equation.

However, we believe many car buyers will continue to want a brick and mortar experience, preferring to kick the tires and test drive before buying. Dealerships will continue to account for a vast majority of cars sold globally during the next decade.

The Tesla Model 

All Teslas are sold online and delivered to the customer’s doorstep. Company-owned showrooms are limited and located at high footfall places like malls. The purpose of the showroom is not to close sales, but to educate, display the product, showcase the latest technologies, and answer any customer queries. By removing franchise dealers from the buying process, Tesla is able to save on dealer commissions and control the overall buying experience. Maintaining closer contact with car-buyers not only enhances this, but also helps Tesla better understand customer expectations and communicate offerings.

Tesla is the only major automaker to have shown increasing sales during Q1 2020. An important factor behind the company’s performance was that its supply was less disrupted due to COVID-19 compared to competitors’, which depended on traditional dealerships. The success of the Tesla business model is expected to encourage other automakers to shift part vehicle sales online.

Exhibit 1: Factors Driving the Shift Towards Digital Retailing

Counterpoint: Factors Driving the Shift Towards Digital Retailing

Key Drivers of Online Sales

  • With most car sales in many countries happening online due to COVID-19, car-buyers are becoming more aware and accustomed to the idea of buying cars online. Dealers are enhancing their online selling capabilities and using unconventional ways to communicate with car-buyers, using Zoom calls and WhatsApp for instance. Initial industry feedback has been somewhat surprising, revealing an overall better buying experience via compared to walk-ins.
  • Growth of comparison and buying sites like, Carvana and Vroom provide a wealth of information like availability, specifications, comparisons and video reviews to aid buying decisions. Price comparisons influence buying behaviour by helping consumers make informed decisions around costs.
  • The COVID19 pandemic has accelerated the shift towards digital retailing. Dealers lacking online capabilities are now partnering with third-party apps to connect and communicate with car-buyers online.

Key Hurdles

  • Automakers are bound by franchise agreements and many states do not allow direct selling by automakers.
  • Many state governments require in-person signature on the documents making full online sales impossible.
  • Many car-buyers prefer to evaluate the car in person and take it for a test drive before making a decision.
  • Arranging home test drives would add to extra time and costs for the dealers.
  • In many countries the e-commerce ecosystem is not developed enough to fully support online sales.


With social distancing unlikely to disappear in the foreseeable future, e-commerce will become an important buying channel for almost everything, including cars. Automakers and dealers are being forced to accept online sales or lose business. An online presence will soon become a ‘must have’ feature. However, dealerships and walk-ins will likely continue to account for the vast majority of car sales through the long term, mainly due to customer preference for test driving and seeing the vehicle in person.

Author: Aman Madhok

Week 4: Automotive Industry Creeping Forward

The COVID-19 pandemic continues to pummel the global auto industry, resulting in its one of the worst performing quarter since the financial crisis of 2008.

With governments having mandated various lockdown measures over the past few months, both supply and demand have been affected. Automakers in China, Europe, and the United States suspended plant operations, disrupting production, and consumer demand has waned as showrooms have closed and people shelter at home.

This week, while many production centers globally have announced extending shutdowns further into May, some automakers have also begun the process of re-starting manufacturing, albeit with caution.

Ensuring Enhanced Safety Protocols

Automakers and suppliers are taking the required steps for safe operations. These include things like temperature screening, daily health update questionnaires, reconfiguring of assembly lines to facilitate one-to-two-meter social distancing, and requiring the use of facemasks and gloves.

Some manufacturers are going beyond the requisite measures. Ferrari will offer voluntary blood tests to check for virus exposure, and FCA’s unions are proposing to move mealtimes to the end of shifts, allowing employees to avoid crowded canteens by clocking off 30 minutes early and eating at home or elsewhere.

Global Plant Openings

In the United States, several large automakers, including FCA, Honda, and Toyota, are aiming to restart production during the first week of May. In Europe, major automakers are hoping to begin building vehicles again in early May. Other automakers around the world are also publicly releasing opening dates, signaling to their suppliers when to ramp up for restart of production.

China Already Back to Business

In China, the initial epicenter of the outbreak and the world’s largest auto market, manufacturers in lockdown since late January resumed operations progressively from mid-February to early March; Volkswagen, Nissan, Hyundai, and Honda announced plant re-openings in mid-February, while General Motors, BMW, Toyota, and Volvo announced re-starting of plants from early April, including those in Wuhan province where the virus outbreak began. Volkswagen has managed to restart manufacturing at 32 of its 33 Chinese plants.

US Big Three in Re-Start Discussions with UAW

For the Detroit automakers, the United Auto Workers union (UAW) plays a critical role in deciding when and how plants will restart. Among the union’s primary concerns is to ensure members who report being ill will not be penalized for time away from work. The UAW has already supported GM and Ford’s efforts to launch the production of essential ventilators at their US plants – operations that have allowed the companies and the union to try out new safety protocols.

Ford, GM, and FCA are looking to restart some of their US plants in early May, and establish regular health protocols like screening, sanitizing, and social distancing. Production of Ford vehicles and engines is expected to resume during this period. Among others, Volkswagen has announced it will restart operations at its Chattanooga, Tennessee, plant. Volvo and Hyundai too hopes to restart work at its US plants by early May. Tesla is going to extend its factory shutdown orders through the end of May, following the extension of shelter-in-place orders in the Bay Area. Hyundai and Kia started operations of in their Alabama and Georgia on May 4.

 European Plants Returning to Normalcy

In Europe, an estimated one million jobs have been lost, with production losses at around two million vehicles. Several automakers have now started some limited production at their plants. Toyota resumed operations at its French and Polish facilities on April 22, after a month-long shutdown. Volkswagen restarted production in Zwickau, Germany, the first assembly plant in the country to restart operations. Audi restarted its engine plant in Gyor, Hungary on April 21. However, the luxury carmaker from the Volkswagen Group is yet to resume its car production in Germany. VW plants in the UK, Turkey, and the Czech Republic are likely to commence operations by early May. Jaguar Land Rover announced last Thursday it will gradually resume production at its Solihull facility in the UK, as well as its factories in Slovakia and Austria from May 18.

Hyundai has restarted output at its plant in the Czech Republic, while Renault has reopened its Portugal plant. The French carmaker’s Romanian facility is likely to resume operations soon. Volvo Cars announced its plants in Sweden and Belgium restarted work on April 20. Daimler’s contract manufacturer, Magna Steyr, restarted production of the Mercedes G-Class luxury SUV at its site in Austria last week. Italian sports car manufacturer Ferrari, one of the first carmakers to close its plant, is preparing to roll out cars from its Maranello facility in the next few weeks.

Indian Auto Industry Given Government Go-Ahead

Automobile, auto parts, and tractor manufacturers in the country have resumed operations after receiving due approvals from respective state authorities, conditional to following precautionary protocols such as social distancing and ensuring high standards of sanitization and hygiene.

Bajaj Auto, India’s leading 2W and 3W manufacturer, restarted operations this week at two of its plants, prioritising production of knock-down kits for export markets. Mahindra & Mahindra also commenced assembly at its tractor plant. Truck and bus OEM Ashok Leyland announced a partial production re-start.

In contrast, and despite having received necessary state approvals, Maruti Suzuki, India’s leading carmaker, has chosen not to resume production at its Haryana facility, as it wants to ensure both its own operational preparedness, and that of its entire supply chain.

Revised Global Automotive Outlook

Despite efforts initiated by automakers to resume manufacturing, Counterpoint remains cautious about the practicality, consistency, and effectiveness of these plans. Automotive supply chains are complex, and depend on many suppliers from disparate locations to be in sync. Shortage of even a single component can hold up an entire production line, resulting in inventory and cashflow backlogs. Unless the entire supply chain is up and running smoothly, vehicle production will remain challenging and constrained. Keeping in mind production already lost, extended lockdowns, challenges in returning to work, and the anticipated subdued demand, we have this week further downgraded our global sales outlook to around 73m units in 2020.

Exhibit 1: COVID-19 Impact on Global Automotive Sales, 2020Counterpoint: COVID19 Impact on Global Automotive Sales in 2020

Week 3: New Health and Safety Features to Come in Cars

Safety features in cars have long been considered critical and fitment mandated by policy continues to progress in this area. The COVID-19 pandemic now brings new health considerations and preventative features to the fore.

Counterpoint Research sees a rising trend over the next few years around health-related features being requested by car buyers – especially amongst vulnerable older age groups, those spending considerable amounts of time in their cars, and drivers and passengers of shared mobility and other public transport options.

Emerging Health and Safety Features in Cars

Preventive health and safety features currently offered by popular automakers as well as those under development are outlined in the exhibit below.

Exhibit 1: Emerging Health Features in Cars

Counterpoint: Upcoming COVID19 Specific Health Features in Cars

COVID-19 Specific Safeguard Features

Recent features developed by OEMs specifically for preventing the ingress of virus and bacterial contagions like COVID-19 include the following:

  • An N95 certified Intelligent Air Purification System which prevents bacteria and viruses from entering the car’s interior environment has been introduced by Geely Motors in China. The OEM is also developing self-cleaning and anti-bacterial surface treatments for commonly used touch points like grab handles.
  • Jaguar Land Rover (JLR) is working on adding a special ultraviolet (UV-C) light sanitizing unit as a part of future models’ HVAC systems to kill germs, bacteria, and viruses.
  • MG Motors recently partnered with Singapore-based Medklinn to explore areas related to car cabin and surfaces sterilisation. Car sterilisation is also gaining popularity in the used car market and workshops.

Given the current climate, these recently introduced health features could prove to be a key consideration for customers, all other things being equal. For instance, clean-air filtration systems are already popular, driven by a growing awareness around rising pollution levels. Additional safeguards combatting bacteria and viruses could further improve brand image by conveying innovation, safety and customer centricity.

With the continued spread of COVID-19, we expect other OEMs to follow in the footsteps of Geely Motors, JLR and MG Motors in the introduction of similar health features, though much is currently unknown about the spread of COVID-19 and efficacy of new features will need to be proven.

Other prevention-related growth areas include aftermarket products of car disinfectants and anti-bacterial seat covers.

Non-Embedded Connected Car Health Applications an Emerging Revenue Opportunity

While embedded health systems fitted as original equipment will add to development time and costs, non-embedded connected services (via smartphones, wearables, and personal devices connected to car infotainment systems) can be implemented more quickly and cheaply. These types of applications can become an alternative alert system for drivers, providing important information on things like hospital locations and infection hot spots as well as enabling general health-related services. Increasing consumer awareness around healthy lifestyles may boost the popularity of such apps, opening potential revenues streams for stakeholders across various sectors.

Exhibit 2: Non-Embedded Connected Health Services Key Stakeholders Counterpoint: Ecosystem of COVID19 Related Health Services

Author: Aman Madhok


Week 2: Vehicle Sales Tracking Severity and Subsiding of Outbreak

Global Update

With almost all countries having initiated varying levels of COVID-19 lockdown measures in March, a significant decline in global vehicle sales for the month was to be expected. Sales numbers from key markets confirm the impact, tracking the growing severity, as well as subsiding, of the COVID-19 outbreak.

Exhibit 1: Global Automotive Sales, M Units

Counterpoint: COVID-19 Automotive Sales Forecast by Region


With automotive production having stopped mid-March, US car sales for the month have dropped by over 39% YoY to around 1m units, the lowest volume for March in over a decade.

The biggest losers in relative volume terms are Chevrolet, followed by Toyota, Nissan, and Honda which have declined by over 60,000 units each.  In most states, however, sales figures for the first week of March were relatively normal, so the reported figures may not yet provide an accurate picture of the full virus impact. April and May will continue to be dismal in light of extended lockdowns, counterpoint expects full year US sales forecast to 13.9m units.


Day-to-day life is now reportedly gaining some normalcy in China, with auto plants cautiously resuming manufacturing operations and consumers slowly coming back to showrooms. Most dealers, however, continue to face inventory shortages; the Honda-Guangzhou JV plant in Wuhan is currently operating overtime to meet demand.

According to the China Association of Automobile Manufacturers (CAAM), car sales declined 42% YoY in 1Q20 largely on the near 80% drop in February, which saw only 310,000 unit sales. Overall, the Chinese automotive market remains weak and fragile, with last month having seen 1.3m vehicles sold, a 46% decline over March 2019.

In a normal year, China would have sold more than 6m new cars in the first quarter; this year, the figure is around 3.6m.

As automakers restart production, boosting demand is now the industry’s main priority. The government has announced cash incentives to stimulate demand and support the industry’s recovery. Several metro cities and provincial administrations are offering cash subsidies of as much as $1,400 per vehicle.

Earlier in April, Beijing announced extending subsidies and tax breaks for new energy vehicles (NEVs) for two more years. It is now evident that electric vehicles have suffered more than the broader market. In March, only 53,000 NEV cars were sold, less than half compared to a year earlier.  It should be noted, however, this number excludes Tesla, which is pushing hard to deliver to its Chinese customers resulting in some replacement effect.

In any case, while the car market may rebound slightly in the second quarter, it is unlikely to sustain nor be able to make up for the first-quarter losses. Counterpoint Analysts are holding to their estimates that China’s auto sales decline this year will be approaching double digits, close to 9%.

South Korea

The one bright spot in the global auto market is South Korea.  The country saw its domestic industry – comprising of Kia, Hyundai, Renault-Samsung, GM Korea, and SsangYong – bounce back nearly 10% in March after seeing big declines in February, when it was down nearly 20% YoY, on automaker shutdowns. 


The situation in Europe remains critical. With Spain and France having gone into lockdown in mid-March, new vehicle sales fell by almost 70% in each market. Sales in Germany, the largest market in the region, dropped by nearly 40%. In the UK, where March is traditionally the strongest selling month with new number plate series being registered,  passenger cars and SUV sales declined nearly 45%. Figures for Western Europe as a whole showed an over 50% sales decline in March.

Counterpoint Analysts expect April sales to be far worse, with lockdowns remaining until at least the end of the month, and likely into May.

Exhibit 2: COVID-19 Impact on Global Automotive Sales, 2020

COVID19:Automotive Sales Forecast 2020E, Counterpoint

Note: The unprecedented and unpredictable nature of the current global health crisis means that we cannot rule out further revisions to the global 2020 automotive forecast.

Author: Vinay Piparsania

Week 1: Current Status and Upcoming Challenges

Recent Developments

US: The US is the new epicenter of COVID-19, where automotive production has entirely stopped with automakers GM, Ford and FCA not announcing any specific dates for reopening their plants. Other automakers Honda, Toyota, and Hyundai plan to open their plants by mid-April, however, considering the situation in the US, these automakers too are expected to extend the shutdown.

China: Life continues to gain normalcy in China. Automotive plants have started to resume operations, and footfall is increasing in showrooms. Most dealers, however, are facing inventory runouts and car shortages. The Honda-Guangzhou JV plant in Wuhan is currently operating overtime to meet demand.

Europe: The situation remains critical in Europe. According to the European Automobile Manufacturers Association (ACEA), the EU-wide production loss now stands at over 1.5 million vehicles, with an average of 18 working days.

Exhibit 1: COVID-19 to Lead Global Automotive Industry into Recession

Counterpoint: Coronavirus impact on global automotive growth

Long Term Impact

The COVID-19 impact to the global automotive industry will linger for the next few years:

Exhibit 2: Current and Future Impact of COVID-19 on Automotive Industry

Counterpoint: COVID-19 Upcoming challenges for automotive industry

Regional Growth

  • China will recover the fastest considering the sustained steps to curtail the virus from resurging, growing indication of normalcy, and the inherent latent demand for vehicles.
  • Historically, Europe has taken more time over economic rebounds compared to the US. For instance, it took European economy over eight years to rebound to the pre-2008 financial crisis level.

Each country will have its own economic recovery packages, incentives, and policies to boost consumer demand. Automakers will need to recalibrate sales and launch strategies, depending upon the recovery timeline of each country.

Cash Crunch

Early April, Daimler has signed up to a new US$13 billion credit line with banks, improving on its financial flexibility. In March, Volkswagen CEO Herbert Diess had announced that plant shutdowns were costing the company US$ 2.2 billion per week. Small suppliers, who do not have much financial buffer, are expected to suffer most amid plant shutdowns. Many of them will need to close if the shutdowns extend beyond a couple of more weeks. While automakers continue to incur costs such as salaries and debt repayments, sales are seeing a steep decline, impacting revenues. We expect most economic relief packages will be in the form of loans (instead of grants), leading to more highly leveraged balance sheets for the coming years.

A Shift in Sourcing Strategy

Having experienced severe supply disruptions during the last few months with an over dependency on China as a manufacturing base, automakers will review their supplier strategy across geographies, and possibly rely more on indigenous suppliers. Japan has earmarked US$2.2 billion to help companies shift manufacturing base from China to Japan, and US$214 million to other countries.

Product Development Delays

Product development cycles and new model launches will be delayed due to the financial challenges and supply chain disruptions. The spend on R&D may likely be reduced as automakers look to conserve capital. Investments in new technologies, like autonomous vehicle, will be deferred. On April 7, GM announced postponing launch of updated models – Chevrolet Equinox, Silverado, and Bolt EV, as well as the GMC Terrain, Sierra, and Cadillac XT4 in the US to year 2022.

Regulatory Changes

Emission norms could be relaxed for automakers to cope up with declining sales. Automakers are already lobbying European Commission to delay the introduction of stricter CO2 norms. During the recession in 2008/9 the governments in the US and Europe implemented scrappage schemes to encourage consumers to replace older vehicles and inject spending into the auto sector. Counterpoint expects the return of similar schemes, with escalating rebates for the most fuel-efficient cars such as full electric.

Author: Aman Madhok

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Podcast: Future of Mobility After COVID-19

The world around us has changed since the COVID-19 outbreak that started in early 2020. Lockdowns have been imposed in several countries, social distancing is being followed in public places and many other changes that we can notice. COVID-19 has also changed the way we commute and travel, with public transport and shared mobility taking a big hit. As a result, mobility looks challenging in the short term. But how does the future of mobility look after COVID-19?

Besides the pandemic, we also have the world economic crisis that has impacted businesses and consumers across the globe. Considering some people will avoid public transport for a while, there is an increasing need for a personal vehicle. But has that improved the car sales? The pandemic has also forced businesses to go digital, so what are dealers and automakers doing to push sales? We answer these questions and more in our new podcast.

In the latest episode of ‘The Counterpoint Podcast’, host Peter Richardson and senior research analyst Aman Madhok discuss the future of mobility after the COVID-19 pandemic. The discussion covers topics including emerging mobility options such as e-bikes, e-scooters and electric vehicles. We have also touched upon the types of investments and partnerships that are happening in the industry, and how they will benefit the future of world mobility.

You can also follow our detailed, weekly update on coronavirus’ impact on the global automotive industry here.

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Podcast: Global Pandemic Makes The Right Pitch for Podcasts

Online music streaming entered a golden era in 2019, with paid subscriptions crossing 350 million users. Moving to 2020, the year started with a global pandemic where the COVID-19 virus outbreak was seen in several countries. As a result, lockdowns were imposed in most countries, and that turned out to be a silver lining to accelerate the growth of the music streaming market. Global subscriptions hit 394 million in Q1 2020, with podcasts continuing to drive growth.

Podcasts have seen big growth as even individual content creators are trying to cater to this segment of the audience. In the current challenging environment due to the coronavirus, health-, wellness- and meditation-related podcasts have grown. Other genres include personal finance and entertainment. The lockdowns have even caused a shift in listening patterns. Earlier, people would listen to podcasts when commuting. Now, as people are spending more time at home, listening has increased on devices like smart TVs, smart speakers, and more.

To attract more customers, music streaming platforms like Spotify have been bringing  promotional offers in key markets like India. The company is offering a yearly subscription plan for just INR 699 (around $9). Apple Music, on the other hand, has expanded to 52 new countries, offering free subscriptions for six months. In terms of revenue share, Spotify leads the pack, followed by Apple Music and Amazon Music.

In the latest episode of ‘The Counterpoint Podcast’, host Maurice Klaehne and research analyst Abhilash Kumar discuss the growth of the music streaming market in Q1 2020. We also deep-dive to understand factors that are driving the growth of podcasts and touch upon the revenue share of the music streaming platform.

Our detailed report on the Global Online Music Streaming Market in Q1 2020 can be found here.

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Qualcomm brings 5G Support, 120Hz Screen Refresh Rate and more to Budget Phones with Snapdragon 690 Mobile Platform

The Snapdragon 690 mobile platform is built on the 8nm node.
The platform brings Sub-6Ghz 5G with support for both SA and NSA bands.
Snapdragon 690 also supports 120Hz screen refresh rate, 4K HDR video capture.

At the IFA 2019 trade show in Berlin, Qualcomm announced its plans of expanding the 5G portfolio beyond flagship chipsets. At the Snapdragon Tech Summit in December 2019, Qualcomm announced the flagship Snapdragon 865, along with Snapdragon 765/765G 5G mobile platforms. Now, six months later, Qualcomm has also announced the Snapdragon 690 mobile platform which brings 5G and other premium features at a more affordable price point.

The Snapdragon 600-series chipsets are widely used in smartphones under the US $300 price point. It is the sweet spot and highly contested segment in major smartphone markets. Smartphones under $300 already come with quad-camera setups, fast-charging batteries, in-display fingerprint scanners, and more. The addition of 5G among other features will make these smartphones even more attractive in 5G markets where consumers want to try out the next-gen connectivity without spending a premium.

Snapdragon 600 Series Leads Mid-Tier Smartphone Segment

counterpoint qualcomm sd600 series percentage shareQualcomm Snapdragon 690 SoC: Key Features

Fast Performance, Energy Efficient

The Snapdragon 690 mobile platform brings key improvements over Snapdragon 675 platform. It is built on Samsung’s 8nm LPP process node making it highly efficient as opposed to 11nm node of Snapdragon 675.

The chipset comes with an octa-core CPU featuring Kryo 560 cores in big.LITTLE architecture. Two of these are Cortex-A77 based performance cores clocked at up to 2GHz, whereas six are Cortex-A56 based efficiency cores clocked at up to 1.7GHz.

Taking care of the graphics is the Adreno 619L GPU. The chipset supports up to 8GB of LPDDR4x RAM. Qualcomm claims that the new chipset offers 20% faster CPU and 60% faster graphics performance over the Snapdragon 675.

Advanced Connectivity

The highlight of the new chipset is the support for 5G connectivity, which is a first for 600-series. Just like the Snapdragon 765-series, the Snapdragon 690 also comes with an integrated modem. But while the X52 5G modem on Snapdragon 765 supports both mmWave and sub-6GHz, the X51 5G modem on the Snapdragon 690 platform only supports sub-6GHz.

The modem also supports Dynamic Spectrum Sharing (DSS), SA (standalone), and NSA (non-standalone) bands, FDD, TDD, and global multi-SIM support. It can offer peak download speeds of up to 1.2Gbps (LTE) and up to 2.5Gbps (5G). In terms of upload speeds, it can offer up to 210 Mbps (LTE) and up to 660 Mbps (5G).

The Snapdragon 690 SoC also brings support for Wi-Fi 6 (802.11ac/802.11ax) with Qualcomm FastConnect 6200 Subsystem, WPA3 security support along with target wake time, and Bluetooth 5.1 connectivity as well. What’s more, the chipset also offers NFC and NavIC GPS support.

counterpoint qualcomm snapdragon 690 features

Smooth Display, Fast Refresh Rate

Flagship smartphones now come with either a 90Hz or 120Hz screen refresh rate, offering smooth visual experience while gaming, watching movies, and videos. Even scrolling through webpages or Ui is smooth. Support for the 120Hz screen refresh rate is another first for the Snapdragon 600-series. It supports display resolution up to Full HD+, along with HDR10 and HDR10+ standards.

The feature is a good addition considering the current work from home (or staying home) scenario due to COVID-19 lockdowns. It is the time where content consumption has increased, where consumers are watching videos and TV shows on smartphones, making video calls to connect with colleagues, family, and friends. A lot of users also end up playing mobile games, and having a screen with a higher refresh rate means enhanced user experience.

192MP Camera Support, Improved Video Recording Capabilities

In the photography department, the Snapdragon 690 SoC supports high-resolution camera sensors up to 192MP. Yet another first for the 600-series chipset is the support for 4K HDR video capture with portrait mode. Slow-motion video capture in HD (720p) resolution and up to 240fps is supported. The Hexagon Tensor AI accelerator has also made it to the chipset, which enables smarter on-device experiences such as the smooth transition between camera lenses, social media filters, voice, and security features.

Talking about 5G smartphones outlook, research analyst, Parv Sharma, said “We expect 19% of the smartphone shipments in 2020 will be 5G capable and this share would grow to 67% by 2024. The penetration of 5G in the above price bands will be the key to mass adoption,”

He further added saying, “in 2020Q1 around 10% of the total smartphone sales were from the Qualcomm Snapdragon 600 series. This Snapdragon series is catering to smartphones in the USD100-USD399 bands, around 90% of the smartphones using the 600 series were in these bands. The availability of 5G in the Snapdragon 600 series will provide an impetus towards the growth of 5G in the low to the mid-end smartphone market, thereby driving global 5G penetration.”

Conclusion: Bringing 5G to Lower Tier, A Key To Drive Adoption

5G has been a buzzword for the past few years, and it started to proliferate in China and the Western markets in 2019. Before the coronavirus outbreak, we were expecting 2020 to be a breakout year in terms of device availability, network rollouts, and coverage. 5G has become a default feature and a key selling point for premium smartphones, but COVID-19 impact signals a possible shift in consumer buying intention.

Our recent Consumer Lens Study reveals one in three smartphone buyers will cut their spending by 20% on their next smartphone purchase. The study was conducted across seven major smartphone markets such as Spain, Italy, India, the USA, and the UK among others. With tough economic conditions across the globe, we are also likely to see a lengthening replacement cycle.

Not everyone can afford a flagship smartphone to experience premium features, and OEMs are answering these consumer needs with affordable premium smartphones. Features like quad-cameras with hybrid zoom, fast-charging battery, high refresh rate display, and 5G have been made available on the affordable premium devices. But as consumer spending is likely to reduce, the Snapdragon 690 platform comes at the right time, which will make these features available on mid-range phones.

HMD Global, Motorola, Sharp, TCL, and LG are among the companies that are planning to release Snapdragon 690 powered smartphones in H2 2020.

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Podcast: COVID-19 To Impact Consumer Smartphone Spending by More Than 30%

It’s been a little over six months since the COVID-19 outbreak started, and a lot of things have changed. To control the spread of the coronavirus, lockdowns have been imposed in several countries like the US, UK, India, and more. The lockdown may have helped in slowing down the virus spread, but it has severely impacted economic activities across the globe. At Counterpoint, we recently conducted our Consumer Lens Study to understand the changing consumer intention and attitudes during the pandemic.

Due to the coronavirus outbreak, a lot of people have lost jobs across different countries. This has affected their future income uncertainty. As a result, consumer buying behavior will strictly be limited to only the essentials. This also means there could be a reduction in their budget. Our Consumer Lens Study aimed to find out if consumers intent to cut their budget for the next smartphone purchase. Also, with social distancing norms in place, we wanted to find out if consumers will be looking for ‘low touch’ sales channels. For companies in the smartphone value chain, our latest podcast episode will help in understanding the consumer demand dynamics and calibrate strategies accordingly in these testing times.

Spending Intention on Purchasing of Smartphone

In the latest episode, “The Counterpoint Podcast” host Peter Richardson discusses the impact of COVID-19 on the consumer spending pattern with senior analyst Pavel Naiya and associate Arushi Chawla. In the podcast episode, Arushi talks about smartphone markets in which we conducted the study and the key findings. Pavel, on the other hand, sheds light on consumer sentiments over buying smartphones from Chinese companies. He also talks about how smartphone makers are coping up with the demand when consumers cannot go to the store and buy smartphones.

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One in Every Three Smartphone Users Will Cut Spending by 10% or More on Their Next Smartphone

One in three respondents to our survey is intending to cut spending by 10% when making their next smartphone purchase, according to our latest Consumer Lens study. The economic activities of all major countries have been severely impacted by the COVID-19 crisis. With coronavirus cases surpassing 8 million globally in June 2020 and the new confirmed cases continuing to rise, all major markets saw a significant reduction in consumer spending. This will likely lead to negative smartphone sales growth globally in 2020.

To better understand consumer intentions in the smartphone market, we conducted a Global Consumer Lens study across seven major smartphone markets (USA, UK, India, France, Germany, Spain, Italy). According to the results, almost half of the respondents are expecting to delay their next purchase. Respondents planning to wait before buying are the highest in India (61%). We found a similar intention in Spain and Italy where 58% and 56% of respondents, respectively, planned to wait longer before replacing their smartphones. In the USA, the number intending to delay buying was 41%. Germany had the fewest respondents planning to delay purchasing (34%).

Commenting on consumer purchase intentions, Senior Analyst, Pavel Naiya, said, “The coronavirus outbreak and future income uncertainty has affected consumer behaviour with many strictly limiting purchasing to only the essentials. Smartphone consumers from Spain and Italy are the most affected. Consumers intending to cut their future smartphone purchase budget by 20% or more are highest in Spain (27%) and Italy (25%), followed by the USA (24%). Looking at the current circumstances, we expect this trend will continue until mid-2021.”

Exhibit I: Future Spending Intention on Purchasing of Smartphone

Counterpoint Research Consumer Lens Future Spending Intention on Purchasing of Smartphone
Source: Counterpoint Consumer Lens May-June 2020

To maintain social distancing, two-thirds of the respondents in India and more than half the respondents in Italy and the USA are looking for a ‘low touch’ sales channels. This will likely lead to more online ordering with home delivery and online ordering but collecting in-store – also known as online-to-offline (O2O), or click-and-collect.

Commenting on the various approaches being taken by manufacturers, Research Associate, Arushi Chawla said, “We have seen many initiatives taking place in developing countries like India in the early phase of the lockdown period. Xiaomi started the Mi Commerce web app to connect consumers with the nearest retail store. Samsung has strategically partnered with Benow to help retailers register their inventory on its platform. Vivo’s Smart Retail, where customers can send their product related queries to retailers through SMS and reach out to the e-store ( or official Facebook page for order placing. Oppo customers can order deliveries or raise service requests on WhatsApp or via SMS.”

Ms. Chawla further added, “All O2O operations come with an overhead cost and additional expenses involved in the awareness-building campaign. It is hard on the bottom-line especially when most of these smartphone manufacturers are already operating on thin margins. Nonetheless, the coronavirus is here to stay, and top brands will look forward to creating long term strategic investments in making their distribution more agile.”

As the Wuhan region of China was the starting point of the COVID-19 pandemic, we explored consumer sentiment about smartphones manufactured in China. The anti-china sentiment is highest among Indian consumers. More than half of the respondents from India have a negative attitude towards Made-in-China products or Chinese smartphone brands. Around four in ten respondents said that they will not buy Made-in-China products or smartphones from Chinese brands. We believe the recent conflict on the India-China Line of Actual Control (LAC) will play a profound role in shaping this behaviour. (Note: this survey was conducted before the India-China faceoff at LAC in Galwan Valley). However, to counter this sentiment, many brands have recently initiated “Made in India” and nationalistic campaigns.

Similarly, about one-fifth of respondents from the USA preferred not to buy Made-in-China products. In the era of globalization, it is difficult to label a product as “Chinese” as its components are sourced across different regions.

Many tech giants including Apple are reported to diversify their manufacturing to other countries, for example, Vietnam, Thailand, India, etc. Though we believe, these manufacturing strategies are more about avoiding an over-dependence on the Chinese ecosystem than anti-China sentiment. Nevertheless, it will be an uphill task to set up similar ecosystems in other countries. It may be easy to diversify the assembling of parts but choosing the right supplier located in a geographical cluster with skilled labour requires long term strategic partnerships and investments.

Country-level Consumer Insights:


  • Online is the fastest-growing channel in the USA. It is more popular among respondents who are not working and who are looking to buy LG, Sony, and is least popular among prospective Apple buyers.
  • As a mature market, most users are already divided between iOS and Android. Brand loyalty for Samsung and Apple users are similar. Apple users are most satisfied with the iPhone camera while Samsung users are most satisfied with the Galaxy display.
  • The importance of selfie camera increases in the last two years, most likely because of new social media AR (Augmented Reality) features that use a selfie camera to create interactive content. More recently, video calls being a major part of daily routines have further accentuated the importance of good front-facing cameras.


  • Two-thirds of UK consumers are considering buying a smartphone according to their usual plan. Only 11% are planning to cut their budget by 20% or more.
  • 43% of the survey respondents are considering replacing their device in the next year. Operator stores continue to be the preferred channel of purchase, followed by mass merchandise electronic stores.
  • Close to 90% of respondents have no hesitation in buying Made-in-China products.


  • Half the respondents are intending to spend between USD135 – USD250 (INR10,000 – INR 20,000)
  • More than half of the respondents intend to replace their devices in the next year.
  • As a big proportion of users will wait for a longer period to replace their smartphone, it will push the average replacement cycle from the current 22 months to around 26 months.
  • Online review articles are the top source of information followed by friends and family and technology-related YouTubers.
  • About seven in ten respondents are interested in buying a separate smartphone for kids to help with their learning.


A Consumer Lens survey was conducted with smartphone users in the seven countries during May-June 2020. The consumer opinions are drawn from a heterogeneous group in terms of age, monthly income, gender, and occupation. Data points were selected which abide to all the logical checks throughout the analysis section and gave a better representation of the ongoing smartphone trend and future purchase intentions.

Analyst Contacts:

Pavel Naiya

Arushi Chawla

Please feel free to contact us at press(at) for further questions regarding our latest in-depth research, insights, or press inquiries.

To receive weekly updates on the COVID-19 situation and our latest research straight to your inbox, click this link to register

Podcast: One in Three Smartphones Sold in the USA in April 2020 Were Online

The COVID-19 outbreak in the US resulted in store closures due to the lockdown and stay-at-home orders. As a result, the US smartphone market was down 21% YoY in Q1 2020. Moving into Q2 2020, the economic downturn and delay in tax refunds slowed down the smartphone sales even further. Nearly 40 million workers in the US applied for unemployment over the past few months. This is a strong base that buys prepaid devices, and a lot of them pay cash as they do not have credit cards.

As 80% of the stores were closed, we saw online smartphone sales grow from 13% to 33% in April 2020. That is a good growth after many quarters. But, is it just a temporary boost because offline stores were closed or are we are seeing a longer-term shift in consumer buying patterns?

counterpoint usa smartphone sales monthly

In the latest episode, “The Counterpoint Podcast” host Peter Richardson and Research Director Jeff Fieldhack discuss the growth of online smartphone sales in the US. The discussion also touches upon how carriers and national retailers are addressing the needs of their customers. While the US market contracted in Q1 and Q2 2020, Jeff also shared his expectations about Q3 and Q4 when Apple is expected to launch 5G smartphones.

Detailed data with monthly split according to country, price band, device type and sales channels can be found here. You can also visit our blog to read about the COVID-19 supply and demand impact on the US market.

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COVID-19 Weighs on European Smartphone Market in Q1 2020

  • The viral outbreak followed by lockdowns caused the Europe smartphone market to contract by 7% YoY and 23% QoQ
  • Apple remained resilient while Huawei declined sharply for the quarter – though this was more than COVID-related

New Delhi, Mumbai, Hong Kong, Taipei, Seoul, San Diego, London, Buenos Aires – June 3rd, 2020

Smartphone sales declined 7% year-on-year (YoY) and 23% quarter-on-quarter (QoQ) in Europe during Q1 2020 amid COVID-19 outbreak, according to Counterpoint’s Market Pulse service. The impact of the pandemic was relatively stronger for Western Europe, down 9% YoY, than for Eastern Europe, down 5% YoY.

Commenting on the overall market, Peter Richardson, VP of Research said, “Q1 is seasonally weak, but the coronavirus outbreak amplified this. The smartphone market decline was primarily due to COVID-19 outbreak across the region in the second half of the quarter. The biggest five markets in Europe entered lockdowns of varying severity at different points in March. Consequently, most of the offline stores were closed, though online remained open throughout. Also, the economic impact of the pandemic has led to lengthening replacement cycles as consumers withhold making discretionary purchases.”

Europe Smartphone Sales Market Share (%), Q1 2019 vs Q1 2020
Europe Smartphone Sales Market Share (%), Q1 2019 vs Q1 2020

Amid the COVID-19 outbreak, Italy was the worst affected of all European countries, driving the smartphone market to a 21% YoY decline. In other markets, some operators such as Vodafone, and retailers such as Dixons Carphone were able to adjust to the sharply higher online demand and somewhat offset the decline. Others however, like Mediamarkt/Saturn in Germany, had underinvested in digital channels and lost sales due to store closures.

Coronavirus did not officially make its presence felt in Russia until late March/early April and hence the market remained relatively resilient in Q1 2020, declining just 1%.

Counterpoint Europe Smartphone Market Q1 2020
Counterpoint Europe Smartphone Market Q1 2020

Commenting on the top OEMs in the European market, Abhilash Kumar, Research Analyst said, “Samsung continues to lead the chart for Q1 2020. This is driven by Samsung’s diversified portfolio across all price bands. Also, marketing campaigns around the Galaxy S20 launch boosted its overall sales. Unlike Chinese OEMs, Samsung had no supply issues and was not impacted by China lockdown worries.  Apple remained flat for the quarter and showed its resilience during the COVID-19 crisis. The iPhone 11 series continues to perform well, despite a lack of supply in some markets and some channels. However, the expensive models slowed considerably in March. Huawei declined a sharp 43% YoY for the quarter as the US trade sanctions continue to bite. Xiaomi has been the biggest beneficiary from Huawei’s decline as it grew 145% YoY capturing 11% share in the quarter.”

Key market summary:

  • Huawei’s co-brand Honor led the Russian smartphone market in Q1 2020.
  • Chinese OEMs like Xiaomi and OPPO benefited from Huawei’s continuing struggles and hence grew more than 150% YoY for the quarter driven by strong performances in Russia, UK, France.
  • 5G smartphone sales accounted for 4% of the overall market sales in Europe in Q1 2020.
  • Apple iPhone 11 was the best-selling model in Europe in Q1 2020.

Analyst Contacts:

Peter Richardson

Abhilash Kumar

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