It is no surprise by now that the COVID-19 outbreak has hit several industries hard. Tech giants such as Huawei and Apple have suffered greatly in the first quarter and a recent report from the Korean media suggests that Samsung may also need to make some changes to adapt to these uncertain times.
The first quarter may have gone somewhat smoothly for the Korean phone maker, but going forward, Samsung was forced to cut down 50% of its orders for smartphone parts and is expecting weaker demand in the near future.
The company showed strong performance in Q1 thanks to the release of Galaxy Z Flip and the S20 series, but things started to take a turn for the worse in April as the virus caused major disruptions in the US and Europe. Smartphone production was halved during the month for both mid-rangers and flagships, and is forecasted to stay this way for the next six months.
Samsung itself is stable enough to take the blow, but others in the supply chain will be hit a lot harder. Samsung makes more than 300 million devices every year including mid-rangers and flagships, making it one of the largest customers for smartphone parts. Therefore, the impact of Samsung not buying parts anymore will be significant for these companies.
Going forward, it is difficult to say how Samsung’s situation will turn out in the coming months but recovery is not expected in the foreseeable future as the pandemic doesn’t appear to be settling down anytime soon.