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Samsung became one of the first tech companies to show how the new coronavirus is affecting businesses on Monday. The company said sales for the March quarter will increase from a year earlier, but won’t be as strong as Wall Street had expected.
Samsung has announced plans to report first quarter sales of approximately 55 trillion Korean won ($ 44.9 billion) and operating profit of approximately 6.4 trillion Korean won (5.2 billion dollars).
Analysts have predicted the company will report revenue of 56.3 trillion won ($ 50 billion) in the March quarter, according to a Thomson Reuters poll, which is slightly higher than the top of the indicative range. Samsung from 54 trillion to 56 trillion won. A year ago, Samsung reported revenue of 52.4 trillion won ($ 42.8 billion) and operating profit of 6.2 trillion won ($ 5.1 billion). .
The company does not provide details on its quarterly performance before releasing its full results later in April. It is likely that Samsung took advantage of the strong chip sales, but took a hit in its smartphone business, as people held back on expensive purchases amid concerns over the coronavirus.
The new coronavirus, which causes a disease called COVID-19, was first detected in the Chinese city of Wuhan at the end of last year. In March, the World Health Organization called COVID-19 a pandemic, and the virus has since changed the way we live. The epidemic has prompted cities and entire countries around the world to ban locks, close stores, cancel events, and order citizens to stay at home to help contain the coronavirus. More than 1.3 million people worldwide were infected on Thursday and more than 73,000 died.
One of the first markets affected by the coronavirus pandemic was Samsung’s home in South Korea. While it is recovering, other important markets like the United States.
The phone struggles
2020 was supposed to be a solid year for the phone industry, as innovations like 5G and foldable screens made people shop again. Instead, financial difficulties and concerns over COVID-19 will limit the number of devices that businesses can make and the number of phones that people will actually buy. Even after the worst of the pandemic is behind the United States and other markets, the global economy is likely to continue to struggle.
Smartphone shipments– down 38% to 61.8 million units, according to Strategy Analytics – as the new coronavirus ravaged China, one of the world’s largest markets and a key manufacturing center. For all this year, . Mobile phone deliveries, which include flip phones, are expected to fall 13% to 1.57 billion units in 2020, while smartphone shipments are expected to drop approximately 11% to 1.26 billion units , according to CCS Insights.
The forecasts echo what some tech companies have warned. Apple said in January that the coronavirus would hurt its revenue and the iPhone’s supply. China is one of Apple’s largest markets and the main place where its devices like the iPhone are assembled. Because factories closed during the peak of the coronavirus epidemic in China, it has caused iPhone shortages around the world, Apple said. Since then, Apple has reopened its stores in China but has closed all stores outside the region indefinitely.
Samsung has also temporarily closed its factories due to problems with the coronavirus. He builds most of his phones in South Korea and Vietnam.
In January, Samsung announced the end of a difficult year – a day after its main rival Apple released a record of revenues and profits and reclaimed its title of the world’s largest smartphone maker. Samsung said at the time that operating profit in the fourth quarter fell 34% to 7.16 trillion won ($ 6 billion). Its total revenue increased 1% to 59.88 trillion won ($ 50.6 billion). Last year marked its worst performance since 2015. Samsung is counting on its, as well as 5G and expansion into cheaper phones, to help its results.
While Samsung had “solid sales of flagship smartphones” in the fourth quarter, its components business – 41% of its turnover last year – was affected by the drop in memory chip prices and the weak demand for signposts.
Samsung’s chip industry is probably benefiting from a boost from data centers that rely on technology to store everything we do online. But the company could struggle if people buy fewer phones, which is another big market for Samsung’s memory chips.