Samsung Expects Chip Recovery But Also Slower Phone Sales Amid Coronavirus Outbreak
Samsung Electronics Co Ltd said on Wednesday the coronavirus pandemic would hurt sales of smartphones and consumer electronics this year, while demand from data centers would fuel a recovery in memory chip markets.
During Samsung's '51th regular shareholders' meeting' at the Suwon Convention Center on March 18, Samsung CEO Kim Ki-nam (vice chairman), CEO Kim Hyun-seok (president), and CEO Dong-jin Ko (president) talked to investors and shareholders.
Chief Executive Kim Ki-nam said the coronavirus and U.S.-China trade disputes were casting a shadow over the outlook for the South Korean tech giant, whose Galaxy smartphones vie with Apple’s iPhones for global dominance.
“The global smartphone market was expected to turn to growth this year, but with virus showing signs of being prolonged, the smartphone market is contracting. But 5G smartphone demand is expected to rise,” Koh Dong-jin, president of Samsung’s mobile and network business, told the annual general meeting in Seoul.
While the smartphone market would shrink, Kim said the chip market would see demand growth after a slump last year exacerbated by excess supply and U.S.-China trade tensions.
At the same time, Kim said he expected chipmakers to focus on upgrading manufacturing processes rather than expanding capacity this year, limiting supply.
Kim Hyun-suk, the company’s consumer electronics chief, said it was too early to predict how the virus would impact on consumers.
“We had expected the consumer electronics market to rise slightly this year, but with the coronavirus fast spreading, uncertainties are growing faster than ever, and it is very difficult to predict the future,” he said.
Kim Ki-nam (vice chairman) said that despite the global economy conditions, the slow memory industry and competition during 2019, Samsung recorded consolidated sales of KRW 230 trillion and an operating profit of KRW 28 trillion. ”
“In these conditions, the semiconductor business continues to innovate in technologies such as 10nm DRAM and 7nm EUV process. The IM division is holding the No. 1 position in smartphones by releasing foldable phones, etc., and is leading the next-generation communication market by commercializing 5G for the first time in the world."
Vice Chairman Kim also explained the company's efforts to improve the company's value. He said, “In order to strengthen the responsible management of the board of directors, we appointed the first outside director as chairman to further improve the corporate governance structure. Recognizing the importance of compliance and ethical management, we established the Compliance Committee as an external independent organization to achieve global level. We have established a strict compliance management system. ”
Samsung Electronics also adopted electronic voting for the meeting and encouraged shareholders to cast votes online.
Vice Chairman Kim Ki-nam said, “To lead the future in any environmental change, we will preempt business opportunities through continuous technological innovations such as AI-only semiconductors and foldable phones, as well as investments in future growth-based technologies such as system semiconductors and QD displays.”