Apple Inc. is unlikely to be the last company to warn on revenue following the new coronavirus outbreak in China this year.

After decades of globalization, supply chains are so intertwined that an epidemic that has largely been contained to China is having repercussions around the world with companies from Volkswagen AG to Microsoft Corp. expressing concern that their ability to meet customer demand may be compromised.

Apple, the world's most valuable company, said on Feb. 17 that it is experiencing a slower return to normal conditions than it anticipated and that "worldwide iPhone supply will be temporarily constrained." None of Apple's Chinese factories are in Hubei, the epicenter of the epidemic, suggesting other companies will be hit harder.

The outbreak, which has sickened more than 73,000 and killed in excess of 1,800, has led to a partially quarantined workforce in areas of the world's second-largest economy, closing factories and severing supply chains.

Worst hit

As companies report fourth-quarter financial results, chief executive officers have been fielding questions about the likely impact on the first quarter of 2020, with most only able to give the vaguest of clues about what to expect. Apple's warning is the first hard evidence of a significant financial impact on a major global company.

The virus will have a tangible impact for companies worldwide due in part to the central role that China plays in the world trade system, said Doug Barry, a spokesman for the US-China Business Council. "Companies will not have a good first quarter, but growth should resume when the virus wanes," he said in an interview.

U.S. manufacturers of wood and paper products source 30% of their inputs from China, making them the most exposed to Chinese supply-chain disruption, followed by computers and electrical equipment makers at 25% and transportation equipment at 18%, according to Oxford Economics.

Automakers are some of the hardest hit because of the just-in-time nature of much of their manufacturing supply chains.

Volkswagen AG, with 36.4% of its total production in China in 2019, is the most exposed, followed by Honda Motor Co. Ltd. at 30%, according to data from LMC Automotive. General Motors Co. leads U.S.-based car producers at 28%, while Ford Motor Co. and Fiat Chrysler Automobiles NV each have less than 6% of their total production in China.

Auto manufacturers in China will cut production by roughly 15% in the first quarter following the virus outbreak, S&P Global Ratings said in a research note.

The effects on the auto industry go deeper because the global supply chain relies so heavily on China, said Vittoria Ferraris, a senior director at S&P Global Ratings. "We estimate the current two-week production shutdown imposed in the Chinese province of Hubei will knock 2%-4% off total annual production in the region, which is home to about 9% of the total Chinese auto production," she said.

Force majeure

Hyundai Corp. has suspended production at car plants across South Korea, including at the world's biggest automotive manufacturing site in Ulsan, which has the capacity to build 1.4 million cars a year. Fiat said on Feb. 14 that it plans to suspend production at its factory in Serbia.

GM said the same day that it is working with suppliers to mitigate any disruption to U.S. production of some of its best-selling trucks, including the Chevrolet Tahoe, Chevrolet Suburban, GMC Yukon and Cadillac Escalade SUVs, even as it begins to restart production in China, CNBC reported.

The Chinese government has granted a force majeure certificate to Huida Manufacturing in relation to its parts supplies to Peugeot SA in Africa, Bloomberg News reported on Feb. 11.

Technology shipments

Impact for makers of computers and electronics are likely to vary greatly from company to company. Among computer game console brands, Microsoft's Xbox is most exposed to mainland China, with 95.1% of U.S. shipments in 2019 coming from there while Hong Kong accounted for a further 3.1%, according to data from Panjiva, a unit of S&P Global Market Intelligence.

Nintendo has slightly less exposure with 90.1% of U.S. seaborne shipments coming from mainland China and a further 8.1% passing through Hong Kong, Panjiva data shows. Sony Corp.'s PlayStation relies on mainline China for 68.2% of U.S. shipments with 18.5% coming from Hong Kong and 7.3% from Taiwan.

Spread of the epidemic may be close to its peak. Chinese authorities reported a slight increase in new cases on Feb. 17 to 2,048, following three days of declines.

Return to work

Still, efforts to restart production are likely to remain challenged as millions of Chinese remain quarantined. Airbus SAS said on Feb. 11 that it had restarted work at its Tianjin assembly plant but that it would only "gradually increase production whilst implementing all required health and safety measures for Airbus employees."

Volkswagen reportedly restarted one of its 15 assembly plants in China on Feb. 13. Caterpillar Inc. said on Feb. 10 that it had reopened most of its facilities in China but gave no details of whether production had resumed, Reuters reported.

Hon Hai Precision Industry Co. Ltd., known as Foxconn, which manufactures products for Apple, Nintendo, Sony and Microsoft, among others, on Feb. 13 denied a Reuters report from the previous day that said the Taiwanese company hoped to resume half of its production in China by the end of the month, Reuters said.

Apple has issues at other suppliers, including Pegatron Corp., and has moved some production to India and Taiwan, AppleInsider reported on Feb. 9, citing renowned Apple supply chain analyst Ming-Chi Kuo.

Drug shortages

While Western pharmaceutical majors are yet to report any critical supply chain issues, Cipla Ltd., one of India's largest drug manufacturers told the Financial Times that supplies for most companies would run out by the end of February if China does not resume production of essential ingredients.

U.S. officials, including U.S. Federal Drug Administration Commissioner Stephen Hahn, said they have not received any reports of shortages of the ingredients made in China that drugmakers need to manufacture their products. However, some pharmaceutical companies are only a few weeks away from facing shortages. There could be "huge unavailability across the chain" if the shutdown extended beyond February, Cipla CEO Umang Vohra told the Financial Times.

Many U.S. manufacturers of generic drugs also source ingredients in China, and supply could be significantly impaired if manufacturing facilities are affected, Moody's Investors Service said on Feb. 12.

"Although most facilities are far from the epicenter of the virus, given how quickly it is spreading, contagion to the pharmaceutical manufacturing hubs can't be ruled out," Moody's said in the report. "Shortages of ingredients could cause the prices of certain drugs to rise rapidly as demand outstrips supply."