Connect with us

International Circuit

How The Coronavirus Will Impact Samsung’s Three Core Market Segments

Speaking at Samsung’s annual meeting in Seoul, Chief Executive Kim Ki-nam outlined a revised business strategy and segments outlook in response to fallout from the coronavirus pandemic, per Reuters.

The South Korean tech conglomerate expects the global smartphone market to contract as a result of the virus, counteracting what was predicted to be a year of growth. This trend will be underscored by an increase in demand for 5G smartphones, but not to the same extent it would have increased without the virus.

Kim believes that chipmakers will focus this year on making changes to manufacturing processes, which would limit supply and ultimately benefit Samsung. Finally, Samsung expects investment boosts from data center firms and wireless operators to increase chip revenues in 2020.

Here’s how we expect coronavirus will impact each of the three core market segments mentioned by Samsung:

  • Smartphones: The trends that Samsung identified — lower demand across the board, with 5G demand still rising but less than anticipated — will likely bear out in 2020. 5G smartphone demand could be further suppressed as network build-outs, and therefore access to service, have been delayed. Furthermore, if the coronavirus places further economic strain on consumers, they will be less likely to buy a 5G device early and break their established upgrade cycle.
  • Data center components: As critical functions of school, work, healthcare, and social life increasingly shift to the cloud amid quarantine measures, demand for data center build-outs will rise. In particular, the demand will remain high if these activities stay partially migrated on the cloud even after quarantine measures subside. Corporations will likely further prioritize migrating their operations to the cloud as a resiliency measure in anticipation of any future disruptions.
  • Network components: The rate of network build-out could be suppressed in the short term — network operators in France are operating under the assumption that the country’s 5G spectrum auction will be delayed, and in China, 5G network build-out may have been delayed due to labor shortages. In the long term, however, expect the demand for network components to rise, as networks around the world have been strained under the increased connectivity usage associated with quarantine measures. Even if network strain decreases after quarantine measures are lifted, governments and customers will likely push for more resilient networks in case of future emergencies.

China will provide some — but certainly not all — clues as to what the economy will look like as the pandemic subsides. As new coronavirus cases within China have dwindled to the single digits, we can look to the country’s economic restart as a signal of what other markets might experience: After posting double-digit drops in industrial production, retail sales, and investment, China is attempting to slowly build back momentum.

The extent to which, for instance, smartphone shipments in the country pick up in the ensuing months could portend consumer behavior more broadly. Of course, this is a crude metric for making predictions, but perhaps the one most relevant in a moment of great uncertainty.

―Business Insider

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Copyright © 2024 Communications Today

error: Content is protected !!