Vendor, Distributor Concern Deepens Over SARS Epidemic

Fears that the epidemic of Severe Acute Respiratory Syndrome, or SARS, is spreading are causing increasing concern among manufacturers and investors in the IT and electronics space. And distributors in the United States said they are becoming concerned about the potential for long-term disruption.

SARS, which has infected more than 4,400 people and killed more than 260 worldwide, appeared initially in southern China in November and has claimed victims throughout Asia, where much of the world's IT manufacturing is done.

Contract manufacturers Benchmark Electronics of Angleton, Texas, and Singapore-based Flextronics last week were forced to respond to investors' concerns that an outbreak among their employees could affect production.

SARS FAST FACTS>> Total cases reported: 4,439 >> Total deaths: 263 >> Countries affected: 26 >> Number of continents where SARS has been reported: 5

Flextronics, responding to a report that the company said implied an outbreak had occurred at one of its facilities, said it has imposed employee travel restrictions and put a self-imposed 10-day quarantine on those who travel within Asia.

Hard-drive manufacturer Maxtor, which has extensive manufacturing facilities throughout Asia, last week added "the impact of SARS on commerce and travel" to its list of risks in its earnings report.

Meanwhile, Matsushita Electric Industrial closed one line of a factory in Beijing that makes mobile phone parts for a day after the husband of an employee drove a SARS patient to a local hospital.

SARS could impact the entire economy, said Steve Tepedino, president of Avnet Hall-Mark, during CRN's Distributor Roundtable earlier this month. "SARS is not under control," he said.

Kent Foster, chairman and CEO of Ingram Micro, said it is still unclear whether SARS is highly infectious and victims have difficulty recovering from it, or whether the whole issue has been overblown. "If it's the first, it's not going to be much longer before we see an impact, before we see things quarantined," he said.

"If people stop traveling to the Far East, if design engineers stop working with [Asia-Pacific] manufacturers, you'll start to see the impact. Products [sitting] over there could be here creating demand," Foster said.

Bob Huang, chairman and CEO of Synnex Information Technologies, said he also shares in the concern about SARS. "Huge production [facilities] are based in [Asia-Pacific], which is the origin of SARS," he said. "It could cause huge disruptions of the supply chain."