The COVID-19 related news is dominating the headlines and causing major volatility in the market. But when we buy stocks, it is the fraction of underlying business we own. So we think it will be helpful to share with our readers where do we see the most impact on the business and where we not.

Starting with the bad news. The smartphone market is definitely taking a hit. Smartphone shipment in the first 2 months dropped 44% in China compared to the same period last year as most factories and offline stores were shut down for the month of February. The silver lining is that things are getting better going into March. Xiaomi has re-opened 1800 offline stores in China last Friday, and 80% of the supply chain is now operational; Oppo and Vivo saw shipment return to the normal level, and expect March to be up 10% compared to last year; Qualcomm is also seeing demand in China returning to the normal level. That being said, the potential demand destruction due to COVID-19 from areas outside of China is still a big unknown.

On the other hand, 5G infrastructure build-up didn't seem to be affected much according to carriers. Verizon last week raised its 2020 Capex to $17.5-$18.5 billion as it accelerates its transition to 5G; China Mobile also plans to increase its Capex by 8.4% in 2020, with RMB 100 billion spending on 5G deployment. China's "new infrastructure construction" policy is set to kick off in the second quarter and we've also started to hear other countries planning to accelerate 5G infrastructure construction to bolster economic development.

Not much update from large data-center operators with their Capex plan, but we'll be very surprised to hear them cutting back at this point given the surge of online activities related to remote working/education/entertainment. For example, Microsoft teams added 12 million daily active users just in the last week reaching a total of 44 million; Slack added 7000 new paid customers from February 1 to March 18, compared to ~5000 per quarter in the previous 2 quarters.