South Korean multinational consumer electronics giant, Samsung Electronics Co., Ltd., has reportedly stated that the global pandemic caused by the coronavirus is likely to adversely affect the consumer electronics and smartphones market in 2020.
However, the company also claimed that the growing demand for data centers might drive the recovery of the memory chip markets. This is expected to bring respite to a sector that has been in a slump since last year.
Samsung chief executive, Kim Ki-nam, stated that the trade war between U.S. and China, and the coronavirus outbreak are impeding the growth outlook for the company, whose Galaxy line of smartphones compete with Apple’s iPhones for dominance over the smartphone market.
Kim Ki-nam stated that the global smartphone industry was anticipated to witness growth in 2020, however, as the COVID-19 virus is showcasing sighs of being prolonged, the industry is shrinking instead of expanding.
Despite the projected slowdown, demand for 5G smartphones is projected to go up. Additionally, while the smartphone market is likely to slow down, the global chip market, which represents 50% of the company’s operating profit, is slated to witness growth in demand after going through a slump in 2019, which was further exacerbated by China-U.S. trade tensions and excess supply.
Fellow chipmakers like Broadcom have pulled or cut their sales outlook owing to the disruptions brought forth by the COVID-19 outbreak. Samsung stated that it anticipates investments coming in from data center enterprises and novel opportunities in domains like automobiles and 5G wireless networks to fuel the chip sales graph across 2020.
Kim Ki-nam further added that the chipmakers are likely to reorient their focus on enhancing their manufacturing processes instead of expanding production capacity, which could further lead to a limited supply.
Recently, company shares were trading up approximately 0.6% as compared to the 0.5% fall in the overall market.