The outbreak of the new coronavirus will likely have a limited impact on South Korea's 5G network equipment vendors, analyst here said Saturday, since they have little business presence in virus-hit China.
As China struggles to contain the spread of the deadly virus, which has killed more than 600 people there, concerns have been mounting over whether South Korea's network equipment makers will also suffer production disruptions like automakers.
"Most local network equipment makers' factories are located in South Korea and Vietnam, so they will not see a direct impact from the coronavirus outbreak," Kim Hong-sik, an analyst at Hana Financial Investment Co., said. "It is also expected that demand for Korean-made equipment will not be affected by the coronavirus outbreak."
Kim pointed out that South Korean network equipment suppliers have little to lose because their sales related to Chinese businesses were very small even before the outbreak of the coronavirus.
"Since South Korean firms rely on U.S.-made parts for their products, Chinese companies have been already reducing orders for them," he said.
Industry observers said it's also hard to imagine Chinese telecommunication firms canceling their 5G investment plans due to the coronavirus crisis, but they expected that the firms' 5G base station installations could be delayed.
"Three major Chinese telecommunication firms planned to start their 5G base station installations in March, but if the current situation persists, their schedules could be delayed," Lee Wang-jin, an analyst at Ebest Investment Securities Co., said.
Analysts said even if China could see a slowdown in its 5G infrastructure setup, 5G equipment makers should not be too worried as major telecom firms in Japan and the United States are to begin their 5G bases station installations in the second half.