Samsung Electronics India Noida smartphone factory. (Photo: Samsung Electronics Newsroom)
As the global spread of new coronavirus infection (Corona 19) continues, the impact on the overall production and sales of domestic manufacturers in the second quarter has become visible. Accordingly, samsung and LG Electronics are expected to improve their performance in the second half of the year, which will determine the annual report.
According to industry figures on 13 March, most of the overseas production facilities except in some Asian countries, such as Samsung Electronics and LG Electronics in Korea and China, were temporarily closed. For a long time, there is a situation where production is disrupted while the place is stopped for almost a month, and as the country’s movement is limited according to Corona 19, sales interruptions and consumption slowdowns are also intensifying.
■2Q ‘phone, household appliances, Tv’s production and sales hit first half performance
LG Electronics Brazil’s Manaus TV plant will be shut down from September 19. The plant was closed last month and resumed operations on June 6, but reopened after three days. The Tennessee washing machine plant, which was scheduled to be restarted on this day, was also extended by 14 days.
An LG Electronics official explained that the measures were “taken into account the situation in the region and the management of the basin.” Corona19 reportedly is adjusting its volume suptensity to respond resiliently to increased numbers of confirmors and the impact of local government guidelines, but as consumer demand declines.
Samsung Electronics Brazil Campinas smartphone factory and Manaus smartphone · The TV plant will be reactivated from 13 March. However, there is growing uncertainty, such as the intensifying conflict over social isolation in Brazil.
In addition, both companies’ Mexican TV factories, North American washing machine factories, and appliances in Europe, TV factory, Indian appliances, smartphone factory, Russian appliances, Tv factories have also temporarily halted production or reduced volumes for the first time this month. There is also the possibility of further shutdowns in accordance with local government guidelines.
■ Gradualrecovery forecast in the second half of the year ” Demand deferred, central rebound in developed countries”
Although the corona 19 impact has been reflected since mid-March, the industry believes that a reduction in performance will be inevitable in the second quarter, mainly on the set business. As early as q3, there is a possibility that performance will improve depending on the deferred demand and peak season. The pace of corona 19 in the second quarter is also key for each country.
First of all, the smartphone industry is expected to rebound in the second half, although production disruptions and sales decline spurred by corona 19 in the first half of the year. Demand will be limited to some extent by the third quarter, but it is expected to revive production, deferred demand, demand for 5G model replacements and related marketing expansion. Instead, the company estimated that global smartphone sales in q3 would increase by 14.5% compared to the previous quarter and 9.9% in the fourth quarter.
“The smartphone market will be transformed into a growth rate due to the delayed launch of new models in the first half, the start of demand for 5G phone-centric replacements, investment in 5G infrastructure in major countries such as China and the United States, and government stimulus policies,” the securities company said.
Lg Allred TV production line in Gumi City, North Gyeonggi Province. (Photo by LG Electronics)
The TV industry is also expected to recover in the second half of the year, although overall shipments are inevitable this year.
Market research firm Omdia estimated that tv set shipments this year were 230 million units, down 9% from the previous year. In China in the first quarter, as consumption gap swelled in the U.S. and Europe in q2, the decline is expected to be 16-19%, and 0-2% in q3-4.
Samsung Securities predicted that Samsung Electronics and LG Electronics’ annual TV shipments would reach 41 million and 25 million units, down 10% from the previous year. Although annual shipments decreased due to the gap in demand in the first half, analysts said that sales could be less impactful as the two companies are competitive in premium and large product lines. Both companies have a high share in developed markets, where demand is expected to recover rapidly.
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Strategies focused on marketing enforcement and market share to make up for sluggish performance are also expected to affect performance. There is also the prospect that the demand for household appliances, TVs and smartphones in China, the origin of Corona 19, will reduce the marketing costs of domestic manufacturers.
Samsung Securities said, “Even after demand has recovered in the second half, it will be difficult for set companies to execute their marketing to make up for their performance this year, making it difficult for profitability to normalize rapidly.”