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The coronavirus outbreak in China may end up leading to a shortage of LCD panels for TVs and PCs, according to research firm IHS Markit
Wuhan, China, which has been ground zero for the outbreak, is also the home of five display panel factories that produce LCD and OLED panels.
To stop the virus' spread, the Chinese government has quarantined the city of 11 million.
Schools, movies theaters, restaurants, and shops within Wuhan have also closed.
As a result, IHS Markit expects the factories to struggle to resume production when the Chinese New Year holiday ends on Feb.
2.
The research firm is currently forecasting a 10 percent to more than 20 percent drop in China's LCD output next month at a time when the country owns over half of the world's display manufacturing capacity.
"These factories are facing shortages of both labor and key components as a result of mandates designed to limit the contagion's spread," David Hsieh, IHS Markit senior director, said in a Friday research note.
"In the face of these challenges, top display suppliers in China have informed our experts that a near-term production decline is unavoidable."
The production shortfall may also lead to slight price increases for LCD panels for TVs, laptops and PC monitors, the research firm added.
"For example, the price for an open-cell LCD-TV panel was originally expected to rise by $1 or $2 per month in February.
However, the actual increase may be $3 to $5 for the month," IHS Markit added.
The good news is that a price increase won't arrive anytime soon.
Hsieh told Daxdi most TV makers are still making a profit amid some shipment overcapacity in the market.
However, the display shortfall could result in a price rise over the long-term.
Two of the display factories in Wuhan are owned by TCL, which is perhaps best known for making affordable 4K TVs.
Another two factories are owned by Tianma, which counts PC maker Asus as a customer.
One of the other big tech manufacturers in China is Foxconn, which builds products for Apple, Sony, HP, and Microsoft, among others.
The company does have a facility in Wuhan, but it told Reuters that it's committed to meeting its "manufacturing obligations."
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Earlier this week, Apple also said it has suppliers in Wuhan, but described them as "alternate sources" for the company's main product manufacturing.
"With respect to supply sources that are outside the Wuhan area, the impact is less clear at this time," Apple CEO Tim Cook said during an earnings call.
"The situation is emerging, and we're still gathering lots of data points and monitoring it very closely," he added.
As for TCL, the company declined to comment on the status of its factories in Wuhan.
Editor's Note: This story has been updated with comment from David Hsieh and TCL.
