According to foreign media reports, the impact of the new crown virus epidemic, a large number of companies around the world to work at home, which will boost the demand for Samsung Electronics memory chips from laptop manufacturers and data centre orders. But this is still unlikely to ease the impact of the company's first quarter consumer electronics business decline.

 

A "Closed" sign is posted in front of the Samsung Electronics Galaxy Harajuku flagship shop in Tokyo, Japan, March 26, 2020.

 

The South Korean tech giant is the world's largest maker of memory chips, and its Galaxy line of smartphones is a major competitor to Apple's iPhone. It also makes household appliances and displays.

 

The company will face pressure in the coming quarters due to the impact of widespread factory and retail shop closures during the outbreak.

 

Samsung already warned last month that the global epidemic would hit sales of smartphones and consumer electronics this year. Analysts say demand growth for memory chips could also be at risk if the epidemic continues to spread.

 

In a recent report, Nomura Securities' head of Korea research CW Chung said, "If the new coronavirus outbreak continues into the second half of 2020, the outlook for the memory chip market could get even worse."

 

When the outbreak first started in China, Samsung expanded its production base to countries such as Vietnam and India. This strategy appears to have paid off: previously, factories across China were closed to contain the outbreak, and competitors such as Apple were hit by supply chain disruptions as a result. Earlier this year, Apple withdrew its earnings forecast for its recently concluded fiscal quarter due to the closure of factories and retail shops in China.

 

However, Samsung has also had to close its factories and retail shops in Europe, India and the US as the outbreak spreads around the world, further dampening investor confidence. Samsung Electronics' shares have fallen 15% so far this year, but are better than the broader market which is down 22%.

 

Samsung launched its next-generation flagship, the Galaxy S20, just over a month ago, but the prospects for the high-end smartphone look bleak at the moment. The 5G-enabled S20 handset has fallen to just a third of its debut price ($1,308) in South Korea, according to an executive at a South Korean carrier.

 

Last year, Samsung's full-year profit was cut by more than half year-on-year as profits from its smartphone and chip businesses slumped.