By: Reuters |

Published: February 18, 2020 8:51:35 pm

(Image: Reuters)

Samsung Electronics stands to be a serious beneficiary of the China manufacturing issues introduced by rival Apple Inc on Monday, reaping the rewards of a decade-long wager on low-cost smartphone manufacturing in Vietnam.

Half of Samsung’s smartphones are actually made in Vietnam, the place the coronavirus that has crippled the China operations of Apple and lots of other companies has thus far had solely a restricted impression on its manufacturing.

Apple stated on Monday it could not meet its income steerage for the March quarter due to the coronavirus impact on each manufacturing and gross sales in China, the place most iPhones are made. Chinese smartphone maker Xiaomi Corp final week additionally flagged a success to its March quarter gross sales.

Huawei, one other main Samsung rival, has not introduced any manufacturing issues, however Samsung insiders, analysts and suppliers count on it’s going to even be hit laborious due to its heavy reliance on Chinese manufacturing and components. Many Chinese and international companies have begun to re-open China factories that had been idled for weeks, however shortages of employees and other issues have in lots of instances saved output to a minimal.

Samsung has additionally largely ceded the China market to its rivals lately, which means it received’t endure from the shop closures and drop in demand that’s hitting Apple and others.

“Samsung is best positioned to climate the virus fallout than its formidable rivals such as Huawei and Apple,” an individual with data of Samsung’s provide chain informed Reuters.

“The virus exposed China risks. We feel fortunate that we were able to escape the risks,” he stated.

Another individual acquainted with Samsung’s considering informed Reuters: “Samsung does not say it publicly. But it is relieved.”

Still, two sources acquainted with Samsung’s Vietnam operations cautioned that ought to the virus outbreak be extended, Samsung would really feel the impression, as the corporate sources many parts from China.

Problems with cross-border shipments additionally cropped up within the early phases of the virus outbreak as Vietnam imposed stricter border controls, in accordance to Hong Sun, vice chairman of Korea Chamber of Business in Vietnam. The points have since been resolved, Sun stated, however dangers stay if Chinese components suppliers can’t get again to work.

Samsung additionally depends on Chinese contract producers for some low-end fashions.

In an announcement to Reuters, the corporate stated: “We are making our best effort to minimize any impact on our operations.”

PatternForce not too long ago reduce its first quarter manufacturing forecasts for Huawei by 15 per cent and Apple by 10 per cent. It reduce projections for Samsung Electronics by a smaller three per cent.

Before the virus, the worldwide smartphone market had been anticipated to finish two consecutive years of falls, pushed by smartphones working on sooner 5G wi-fi networks. But the virus outbreak will throw chilly water on any rebound, with international shipments seemingly to file one other decline.

Since beginning telephone manufacturing in Vietnam in 2009, Samsung has aggressively boosted output by means of cheaper labor and beneficiant authorities incentives. Quite a few South Korean suppliers adopted swimsuit, powering its breakneck development.

Samsung ended its personal smartphone manufacturing in China final 12 months as its market share plunged to practically zero.

Apple makes most of its iPhones in China by way of Chinese firm Foxconn. Manufacturing amenities there that produce Apple’s iPhone and other electronics have begun to reopen, however they’re ramping up extra slowly than anticipated, Apple stated on Monday.

Last week, Samsung unveiled a trio of flagship Galaxy S20 smartphones in addition to its new foldable phone. Sources stated the virus may delay new product launches by rivals.

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