Coronavirus a Negative for Universal Display, but Positive For Western Digital: Analyst

Manufacturing of semiconductor and other hardware products will be impacted by the coronavirus in China, according to an analyst.
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The coronavirus is wreaking havoc on global stock markets and the direct impact could be strongest on certain technology hardware makers, according to an analyst. 

Universal Display (OLED) - Get Report, a $9 billion New Jersey-based maker of OLED smartphone displays with manufacturing plants in Wuhan, China, will likely have to reduce manufacturing volumes in light of the virus. A travel ban has been placed on Wuhan, the city in which the virus originated. 

"Wuhan is a major manufacturing hub in China, directly impacted by the coronavirus outbreak," wrote Susquehanna Financial analysts Mehdi Hosseini. "Universal Display could be adversely impacted by inability to ship key material into Wuhan." 

Universal Display stock was falling 6.09% to $193.52 a share on Monday. Shares are up 89% in the past year, however.

Tighter supply of NAND memory owing to the outbreak, however, could be a tailwind to  memory chip maker Western Digital, as NAND chip prices would rise. China's leading memory chip firm, Yangtze Memory Tech Co., supplies an estimated 5% of the world's NAND memory and is located in Wuhan. Disruptions to production would be "marginally positive" for WDC, Hosseini concluded. 

Western Digital shares were falling 3.73% to $66.93 a share on Monday afternoon. Shares of Western Digital are up 52% in the last year, however, as the company has directly benefited from a rebound in chip pricing, after an oversupply of semiconductors in late 2018 caused a long valley and trough in chip pricing.