HT TECH wants to start sending you push notifications. Click allow to subscribe

Samsung set to benefit from China virus woes afflicting Apple, other rivals

Half of Samsung’s smartphones are now made in Vietnam, where the coronavirus that has crippled the China operations of Apple and many other firms has so far had only a limited impact on its production.

By: REUTERS
Updated on: Aug 20 2022, 19:31 IST
Samsung has also largely ceded the China market to its rivals in recent years, meaning it won’t suffer from the store closures and drop in demand that is hitting Apple and others. (REUTERS)
Samsung has also largely ceded the China market to its rivals in recent years, meaning it won’t suffer from the store closures and drop in demand that is hitting Apple and others. (REUTERS)

Samsung Electronics stands to be a major beneficiary of the China production problems announced by rival Apple Inc on Monday, reaping the rewards of a decade-long bet on low-cost smartphone manufacturing in Vietnam.

Half of Samsung's smartphones are now made in Vietnam, where the coronavirus that has crippled the China operations of Apple and many other firms has so far had only a limited impact on its production.

You may be interested in

Mobiles Tablets Laptops
11% OFF
Samsung Galaxy S24 Ultra
  • Titanium Black
  • 12 GB RAM
  • 256 GB Storage
₹119,999₹134,999
Buy now
5% OFF
Apple iPhone 15 Plus 256GB
  • Black
  • 6 GB RAM
  • 256 GB Storage
₹94,900₹99,900
Buy now
9% OFF
Apple iPhone 15 256GB
  • Black
  • 6 GB RAM
  • 256 GB Storage
₹90,990₹99,900
Buy now
39% OFF
Samsung Galaxy A03s
  • Black
  • 3 GB RAM
  • 32 GB Storage
₹8,199₹13,499
Buy now
Apple MacBook Pro MXK52HN A Ultrabook
  • Space Grey
  • 8 GB RAM
  • 512 GB SSD
₹134,900
Buy now
Apple MacBook Pro MV972HN A Ultrabook
  • Space Grey
  • 8 GB RAM
  • 512 GB SSD
₹134,900
Buy now
Apple MacBook Air M2 2023 Ultrabook
  • Silver
  • 8 GB RAM
  • 256 GB SSD
₹134,900
Buy now
Apple MacBook Pro M2 MNEH3HN A Ultrabook
  • Space Grey
  • 8 GB RAM
  • 256 GB SSD
₹100,000
Buy now
3% OFF
Apple iPad Pro 11 2022 WiFi 1TB
  • Silver
  • 16 GB RAM
  • 1 TB Storage
₹147,328₹151,900
Buy now
3% OFF
Apple iPad Pro 12 9 2022 WiFi plus Cellular 256GB
  • Silver
  • 8 GB RAM
  • 256 GB Storage
₹133,750₹137,900
Buy now
3% OFF
Apple iPad Pro 12 9 2022
  • Silver
  • 8 GB RAM
  • 128 GB Storage
₹124,051₹127,900
Buy now
10% OFF
Apple iPad 10 9 2022 WiFi plus Cellular 64GB
  • Blue
  • 64 GB Storage
₹53,900₹59,900
Buy now

Apple said on Monday it would not meet its revenue guidance for the March quarter due to the coronavirus impact on both production and sales in China, where most iPhones are made. Chinese smartphone maker Xiaomi Corp last week also flagged a hit to its March quarter sales.

Also read: Looking for a smartphone? To check mobile finder click here.

Huawei, another major Samsung rival, has not announced any production problems, but analysts expect it will also be hit hard due to its heavy reliance on Chinese manufacturing and parts. Many Chinese and foreign firms have begun to re-open China factories that were idled for weeks, but shortages of workers and other problems have in many cases kept output to a minimum.

Samsung has also largely ceded the China market to its rivals in recent years, meaning it won't suffer from the store closures and drop in demand that is hitting Apple and others.

"Samsung is better positioned to weather the virus fallout than its formidable rivals such as Huawei and Apple," a person with knowledge of Samsung's supply chain told Reuters.

"The virus exposed China risks. We feel fortunate that we were able to escape the risks," he said.

Another person familiar with Samsung's thinking told Reuters: "Samsung does not say it publicly. But it is relieved."

Still, two sources familiar with Samsung's Vietnam operations cautioned that should the virus outbreak be prolonged, Samsung would feel the impact, as the company sources many components from China.

ALSO READ: Coronavirus impact: China's smartphone sales may decline 20% in Q1

Problems with cross-border shipments also cropped up in the early phases of the virus outbreak as Vietnam imposed stricter border controls, according to Hong Sun, vice chairman of Korea Chamber of Business in Vietnam. The issues have since been resolved, Sun said, but risks remain if Chinese parts suppliers cannot get back to work.

Samsung also relies on Chinese contract manufacturers for some low-end models.

In a statement to Reuters, the company said: "We are making our best effort to minimize any impact on our operations."

TrendForce recently cut its first quarter production forecasts for Huawei by 15% and Apple by 10%. It cut projections for Samsung Electronics by a smaller 3%.

Since starting phone production in Vietnam in 2009, Samsung has aggressively boosted output through cheaper labour and generous government incentives. A number of South Korean suppliers followed suit, powering its breakneck growth.

Samsung ended its own smartphone production in China last year as its market share plunged to nearly zero.

Apple makes most of its iPhones in China via Taiwanese company Foxconn.

Last week, Samsung unveiled a trio of flagship Galaxy s20 smartphones as well as its new foldable phone. Sources said the virus could delay new product launches by rivals.

But the woes of Apple and Chinese rivals are not necessarily good for Samsung, as the South Korean tech giant also supplies memory chips and displays for Apple's iPhones and other smartphones. Samsung counts Apple and Huawei among its top five customers.

"The virus outbreak is positive for Samsung's mobile division, but negative for Samsung's chip and display businesses," Greg Roh, an analyst at Hyundai Motor Securities, said.

"Samsung will not be completely immune from the virus," he said.

Follow HT Tech for the latest tech news and reviews , also keep up with us on ,Twitter, Facebook, , and Instagram. For our latest videos, subscribe to our YouTube channel.

First Published Date: 19 Feb, 10:48 IST

Sale

Mobiles Tablets Laptops
6% OFF
Apple iPhone X 256GB
  • Silver
  • 3 GB RAM
  • 256 GB Storage
₹84,900₹89,900
Buy now
7% OFF
Apple iPhone 13 Pro 256GB
  • Gold
  • 6 GB RAM
  • 256 GB Storage
₹148,900₹159,900
Buy now
8% OFF
Apple iPhone 12 Pro Max 256GB
  • Gold
  • 6 GB RAM
  • 256 GB Storage
₹82,999₹89,900
Buy now
12% OFF
Apple iPhone 13
  • Blue
  • 4 GB RAM
  • 128 GB Storage
₹52,999₹59,900
Buy now
6% OFF
Apple iPad 10 2 2021
  • Silver
  • 3 GB RAM
  • 64 GB Storage
₹31,900₹33,900
Buy now
10% OFF
Apple iPad Air 2020
  • Space Gray
  • 4 GB RAM
  • 64 GB Storage
₹53,999₹59,900
Buy now
3% OFF
Apple iPad Pro 11 WiFi Cellular 512GB
  • Silver
  • 4 GB RAM
  • 512 GB Storage
₹108,532₹111,900
Buy now
3% OFF
Apple iPad Pro 12 9 2022 WiFi plus Cellular 512GB
  • Silver
  • 8 GB RAM
  • 512 GB Storage
₹138,599₹142,900
Buy now
11% OFF
Apple MacBook Air M2 MQKP3HN A Ultrabook
  • Space Grey
  • 8 GB RAM
  • 256 GB SSD
₹82,990₹92,900
Buy now
11% OFF
Apple MacBook Air M1 MGN63HN A Ultrabook
  • Space Grey
  • 8 GB RAM
  • 256 GB SSD
₹82,990₹92,900
Buy now
7% OFF
Apple MacBook Pro MXK52HN A Ultrabook
  • Space Grey
  • 8 GB RAM
  • 512 GB SSD
₹139,990₹149,900
Buy now
8% OFF
Apple MacBook Air M1 Z124J001KD Laptop
  • Space Grey
  • 16 GB RAM
  • 256 GB SSD
₹105,999₹114,900
Buy now