As the first technology company to announce financial reports after the epidemic, Samsung’s performance has also brought a lot of confidence to the semiconductor industry.
Samsung has resisted the pressure of the new crown epidemic.
On April 7, Samsung announced its preliminary financial report for the first quarter ended March 31, 2020: Q1 revenue was 55 trillion won (about 44.7 billion US dollars), a year-on-year increase of 5%; operating profit was 64,000 billion won (about 5.2 billion U.S. dollars), an increase of 2.7% year-on-year.
For Samsung, which has continuously shut down factories during the epidemic, Q1’s revenue performance was much better than expected, and Samsung Electronics’ stock price also rose 3% at the opening today.
At the same time, as the first technology company to announce financial reports after the epidemic, Samsung’s performance has also brought a lot of confidence to the semiconductor industry.
PC, data center demand is stable, memory chips boost Samsung business
Previously, due to the decline of smartphones, Display panels, semiconductors and other businesses and the impact of trade frictions between Japan and South Korea, Samsung’s net profit in 2019 was 21.74 trillion won (about 127.1 billion yuan), a year-on-year drop of 51%, while in 2020 The sudden new crown epidemic at the beginning of the year made Samsung even worse.
However, judging from several data disclosed by Samsung so far, Samsung still found “new opportunities” during the epidemic, and its performance was relatively stable.
Market analysts believe that Samsung Electronics’ semiconductor business will help them stay afloat amid the COVID-19 crisis.
At present, most companies around the world have switched to online office, and students in some countries and regions have also switched to online teaching. The surge in orders for memory chips for notebooks, PCs, tablets and data centers has stimulated the market demand for Samsung chips.
According to data provided by DRAMeXchange, a market research organization for the semiconductor industry, the average contract price of 8GB DDR4 memory chips in March was US$2.94, up 2.1% from February this year. This is also the third month in a row that the price of the product has risen. The price of a 128GB 16Gx8 MLC flash memory chip was $4.68, up 2.63 percent from the previous month.
In addition, this round of rising demand for personal office hardware has also benefited many upstream and downstream suppliers other than Samsung. Not surprisingly, the businesses of Intel, AMD, Lenovo, Dell, HP and other companies will be boosted by the demand for personal computers. vibrate.
“Samsung Electronics’ chip business is unlikely to see a big change in the first quarter,” said Lee Soon-hak, an analyst at Hanwha Investment & Securities.
Although Samsung’s business revenue is not volatile in the short term, if the global new crown epidemic continues, Samsung will face more pressure in the next few quarters of 2020.
The impact of the epidemic continues, testing the long-term resistance of the supply chain
There is no doubt that the new crown epidemic has caused a heavy blow to Samsung’s smartphone, display panel and other businesses.
Affected by the epidemic, Samsung has been forced to temporarily close about a quarter of its global manufacturing plants, including factories in India, Brazil, Russia and the United States, and retail stores in parts of Samsung have also closed.
The sales prospects of Samsung’s flagship Galaxy S20 series just launched in March are bleak. A South Korean operator’s executive revealed that the price of Samsung’s 5G mobile phone S20 in South Korea is already one-third of the $1,308 release price.
Analysts believe that “the decline in Samsung Electronics’ smartphone shipments may extend into the third quarter before rebounding in the fourth quarter.”
It has also rattled investors as factories and retail stores in various regions closed: Samsung Electronics shares are down 15 percent this year.
And due to the delay of large-scale events such as the Tokyo Olympics, it will also affect Samsung’s panel and TV business to some extent.
Considering the impact of the epidemic on the global supply chain and the increase in uncertain global economic conditions, Samsung quickly “survived” and cut off LCD production capacity: Samsung Display announced that it will stop LCD production from 2021 to speed up the transition to more advanced production of quantum dot (QD) panels.
But even so, Samsung’s display panel business, which has been profitable for three consecutive quarters, may still lose money again due to weak customer demand. And under the chain reaction of the current supply chain, Samsung Electronics’ chip foundry business may be affected by the decline in demand.
In the long run, Samsung’s survival pressure is very high.
“The outlook for the global memory market could get worse if the coronavirus outbreak continues into the second half of the year,” CW Chung, head of research at Nomura Securities in South Korea, said in a recent report.
In the preliminary financial report released this time, Samsung did not disclose the net profit and the specific revenue of each business. More detailed data will be released later this month.
According to the latest statistics from the Semiconductor Industry Association (SIA), global semiconductor sales in February this year decreased by 2.4% compared with January, and China was hit hard, with a monthly decrease of 7.5%. SIA President and CEO John Neuffer cautioned that current sales figures do not yet reflect the impact of the pandemic on global markets.
With the outbreak of the global epidemic since March, the impact of the new crown epidemic on the semiconductor industry and even the entire technology industry will gradually appear after March and April, and reach its peak.
Under the nest, An has finished eggs. The global supply chain is closely related, and the impact of the “black swan” event on the industry may be glimpsed by the financial reports of the technology giants that have been announced one after another.
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