- Samsung will see its smartphone production fall by more than 50% in April due to the coronavirus.
- Some of Samsung’s biggest factories in countries like Brazil and India have been closed for weeks.
- The smartphone industry on the whole is reeling and there’s no telling when demand will return to pre-coronavirus levels.
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Samsung’s smartphone production is poised to drop by more than 50% this month on account of the coronavirus pandemic. The South Korean tech giant, which typically manufactures 25 million handsets in April, will see that figure drop down to around 10 million units according to a report from The Elec. That’s an astounding 60% decline, to be precise, and the resulting sales drop-off will undoubtedly have a huge impact on the company’s bottom line.
There are a few factors in play here worth mentioning. For starters, Samsung three weeks ago shut down a number of its smartphone factories in Slovakia, South Korea, Brazil, and India in order to comply with government shutdown directives designed to stop the coronavirus from spreading.
Additionally, with demand for new smartphones currently lower than it’s been in quite some time, there’s simply no point to keep production running at full tilt when the bulk of new phones will likely end up sitting on store shelves for who knows how long.
“There is still quite a bit of inventory left over from March due to the coronavirus,” a source familiar with Samsung’s plans told The Elec, “and plants in India and Brazil have been shut down as well. Logistics alone, it doesn’t make sense to churn out more than necessary.”
The report adds that production may fully resume sometime next month once workers are allowed to return to factories in Brazil and India. That, of course, may be an optimistic timeline given that it’s taken longer to contain the spread of the coronavirus than many anticipated. In India, for example, a government-imposed lockdown that was set to expire this week was recently extended to early May.
Samsung, of course, is not alone as smartphone manufacturers across the board will see a huge decline in sales this year due to the coronavirus. Apple, for instance, saw its iPhone sales in China absolutely plummet in February as it sold an estimated 500,000 units. Meanwhile, overall smartphone shipments in China in March fell by 20% drop compared to the previous year.
Looking ahead, it’s hard to gauge when the smartphone market will return to normal. Aside from the fact that the coronavirus may linger on for weeks on end, if not longer, the economic impact of the coronavirus will likely have a very real and longstanding impact on demand. The United States, for instance, now has more than 22 million unemployed individuals and the number of unemployment claims recently hit record levels. In other words, the amount of disposable income people will have to spend on a luxury item like a top of the line smartphone will be markedly less than in years past.