- Although SARS is forecasted to provoke a 15% to 20% drop in Chinese PC market sales, Taiwanese desktop PC shipments will largely emerge unscathed given that China accounts for only 13% of shipment volume. With over 70% of shipments bound for European, North American, and Japanese markets where SARS has not taken root, and facing only slight impact from the Chinese market, volume forecasts for the second quarter of 2003 have been revised downward between 1% and 2% to approximately 5.8 million units.

Around the desktop PC manufacturing clusters in southern China, an area which has seen a rather virulent spread of the epidemic, Taiwanese makers have implemented strict preventative measures to stonewall SARS infections. Such makers have also requested that component suppliers adopt similarly strict measures to stave off shortages from smaller-scale suppliers with insufficient contingency plans. Additionally, to address possible production halts, desktop PC makers have been adjusting capacity outside of China, building up inventories, or making arrangements with overseas suppliers. In light of such comprehensive preparations, desktop PC makers are not exposed to supply shortage risks.

Following slow sales in the first quarter and low seasonal demand in the second, channels are awash in two to three week inventories, at least one week higher than typical levels. Brand-name vendors are thus not requesting that desktop PC manufacturers boost inventories of finished goods because of SARS. If leftover inventories are smoothly liquidated in the second quarter and SARS is brought under control in the first half of 2003, shipments will be able to attain forecasted levels.