005930.KS - Samsung Electronics Co., Ltd.

KSE - KSE Delayed Price. Currency in KRW
+900.00 (+1.85%)
As of 3:30PM KST. Market open.
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Previous Close48,700.00
Bid0.00 x 0
Ask0.00 x 0
Day's Range49,000.00 - 50,200.00
52 Week Range40,850.00 - 62,800.00
Avg. Volume17,602,776
Market Cap329.735T
Beta (5Y Monthly)0.93
PE Ratio (TTM)N/A
Earnings DateApr. 29, 2020
Forward Dividend & Yield354.00 (0.73%)
Ex-Dividend DateDec. 27, 2019
1y Target Est54,903.00
  • Samsung Q1 beats estimates; chips likely to prop up virus-hit Q2
    Reuters Videos

    Samsung Q1 beats estimates; chips likely to prop up virus-hit Q2

    Solid chip sales have helped cushion the blow to smartphones and TVs at Samsung. The company said on Tuesday (April 7) its first-quarter operating profit likely managed to rise slightly from a slump a year earlier. The global leader in semiconductors is benefiting from higher demand for chips from laptop makers and data centres, as global lockdowns have led to a shift to working from home. Samsung said operating profit was expected to be $5.2 billion in the quarter to the end of March, and revenue likely rose 5%. Samsung shares traded 2.3% higher while the broader market was up 1.9%. The maker of phones, TVs and memory chips is the first global tech company to report its quarterly earnings estimates. Samsung said last month the virus would hurt sales of smartphones - which accounted for about 47% of its revenue last year. When the outbreak started in China last year, its strategy of spreading its production base to countries including Vietnam and India seemed to pay off as supply disruptions in China hit rivals such as Apple. But it's now a major global issue, and Samsung too has had to close factories and retail stores in Europe, India and the U.S.

  • Samsung's solid chip sales unlikely to help profits
    Reuters Videos

    Samsung's solid chip sales unlikely to help profits

    The global shift to working from home is boosting demand for Samsung's memory chips as laptop makers and data centers snap them up. But in guidance set to release Tuesday (April 7), the South Korean tech giant's first-quarter profits are still likely to remain flat. That's because sales of the company's smartphones and other consumer electronics are falling, and analysts tell Reuters that longer-term, the bump in chip sales could be at risk, too. The shutdown of factories and retail stores worldwide is hitting the company on two fronts and unnerving investors. Samsung's shares have slumped 15% so far this year but outperformed the wider market's fall of 22%. Prospects for the company's flagship Galaxy S20 premium smartphones, launched just over a month ago, are looking dim. An official at a local carrier in South Korea told Reuters the 5G enabled phones are already selling at a third of their launch price. One brokerage - Hanwha Investment & Securities - estimates Samsung's smartphone sales in the first quarter fell 17% from just a year ago. Last year Samsung's full-year earnings were halved by their smartphone and chip businesses' slump in profits. Smartphone rival Apple has also rolled back its profit forecast over production and retail shutdowns in China.

  • Samsung earnings guidance stays upbeat despite global macro crisis

    Samsung earnings guidance stays upbeat despite global macro crisis

    Samsung overnight released its earnings guidance for the first quarter of 2020, stating that it expected sales of $45.4 billion and an operating profit of roughly $5.3 billion. Samsung recognizes four main segments: consumer electronics (19.2% of sales and includes smart devices like TVs), IT & Mobile (51.9%, and includes key flagship products like the Galaxy line of smartphones), Device Solutions (39.4%, which includes display components, memory, and semiconductors) and Harman (4.2%, which includes audio and connected car technology), which it acquired in 2016 for $8 billion. Samsung had been on a tear until the crisis around COVID-19.

  • Bloomberg

    Lakewood Says ‘Virtually No Long Position’ Spared in Quarter

    (Bloomberg) -- Lakewood Capital Management LP posted a net loss of more than 31% in the first three months of the year, as “virtually no long position was spared from the market sell-off,” according to a letter sent to clients that was viewed by Bloomberg.The fund’s equity exposure was 98% long and 40% short, with net equity exposure coming out to slightly more than 58%. Nearly all of the fund’s long positions “were reporting record financial results with bright outlooks for the year ahead” up until a “few short weeks ago,” the April 2 letter said.“As fears of the spread of the coronavirus rapidly escalated and ultimately paralyzed the global economy, the markets were thrown into sudden turmoil, leading to a swift repricing of all stocks in our portfolio that we unfortunately did not adequately anticipate,” Lakewood’s Anthony Bozza told clients in the letter.The bruising quarter for Lakewood illuminates the struggle for managers as they cope with fallout from the Covid-19 outbreak, which has roiled markets. In March, hedge funds posted their biggest monthly decline in six years, according to Bloomberg Hedge Fund Indices data.For Lakewood, the most pronounced declines in its long bets occurred in the fund’s financial, industrial and European holdings, according to the letter.The process of responding to the new environment led the fund to reduce some positions, increase others and add “a substantial number of new positions,” several of which it has previously owned.Winners, LosersThe fund’s largest winners in the quarter were “all short positions of roughly equal contribution,” including GreenSky Inc., Ollie’s Bargain Outlet Holdings Inc. and Hennes & Mauritz AB. Conversely, the biggest losers in the same period were long positions in the financial sector including CIT Group Inc. and Citigroup Inc.The fund’s current core shorts include AAON Inc., Korean biotech companies and “certain highly-valued ‘growth’ financials.”Among the Korean biotech companies in the fund’s core shorts are Celltrion Inc., Samsung Biologics Co. and SillaJen Inc. It is short financial stocks with “earnings multiples that would be difficult to justify even in a bull market,” naming Kinsale Capital Group Inc., RLI Corp. and First Financial Bankshares Inc.The letter said Lakewood employees are working remotely and the company isn’t having disruptions in its workflow process or experiencing interruptions in service from its key service providers.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Samsung Will Offer Clues on How Covid-19 Is Roiling Global Tech

    Samsung Will Offer Clues on How Covid-19 Is Roiling Global Tech

    (Bloomberg) -- When Samsung Electronics Co. brass addressed analysts during its last earnings call, much of the talk revolved around finally turning the corner after years in the doldrums. That was in January, before Covid-19 threw the global economy into a tailspin.Now, executives are struggling to assess the damage. In the short term, Samsung’s most profitable business is riding a surge in online activity from the millions confined to home, driving demand for the memory chips that help power datacenters and cloud services. But should the pandemic persist into the second half -- a worst-case scenario -- the tech giant foresees missing its own 2020 revenue projections by a double-digit percentage, according to people familiar with internal discussions.Samsung unveils preliminary earnings Tuesday, becoming one of the first major technology corporations to paint a picture of how the pandemic impacted the global tech industry in 2020’s first three months. As the world’s largest maker of memory chips, phones, displays and appliances, the Korean giant is exposed to the economic shocks of Covid-19 like few other tech corporations. The novel coronavirus has already forced Korea’s largest company to shut plants from Gumi at home to India, costing Samsung days of lost production. While it’s expected to post first-quarter revenue growth, the question is whether the initial surge in semiconductor demand can offset a hit from what could be the worst global economic shock in at least a generation.“We are truly in uncharted waters as the tech industry in general has continued to grow, perhaps at varying rates, but we haven’t seen a broad-based, global downturn such as we may be in line for,” said Robert Maire, president of Semiconductor Advisors in New York. Chip demand in particular “will likely not be as robust as it could have been as demand for devices that contain semiconductors, such as smartphones, TVs and consumer electronics, will be reduced through negative economic impact.”Foremost among the divisions under scrutiny is the semiconductor unit, which accounts for more than half of operating profits at Samsung. It’s been pounding out memory chips -- the lubricant of the tech industry -- round the clock, essential in datacenters hosting everything from video conferences to e-commerce. But executives and investors worry that prolonged Covid-19 lockdowns may crimp final demand for smartphones and other electronics -- and ultimately deal a serious blow to the chip industry’s nascent recovery.Read more: Apple Tells Staff U.S. Stores to Remain Closed Until Early MaySamsung’s shares have dived more than 20% since their January 2020 peak, depressed by a series of analysts’ price-target cuts. Much of the hit could come this quarter since Covid-19 escalated globally in March. Revenue growth is likely to fall off steeply, according to Eugene Investment & Securities, which projects a 12.3% decline in the June quarter from a forecast for a mere 0.1% increase in the January to March period.Among the analysts that cut price targets was Hana Financial Investment, which also slashed its projection for Samsung’s 2020 smartphone sales from 300 million units to 260 million. It expects OLED panel shipments to plunge 12% to 373 million this year. Now that the Euro 2020 soccer tournament and Tokyo Olympics have been postponed, TrendForce also lowered its market forecast for TV shipments by 5.8% to 205.2 million units, warning that could slip further as the situation worsens in North America and Asia.“The current financial crisis that accompanies the pandemic has produced a lot of uncertainties and could surpass the Financial Crisis of 2007-2008 in scale,” TrendForce said on March 30. “Hence, the general economic outlook for 2H20 could become even gloomier as the pandemic is not expected to be brought under control in the short term.”Read more: Micron Gives Strong Outlook Lifted By Data-Center DemandThat’s a far cry from just a month ago, when Samsung told shareholders the memory market will stabilize this year thanks to upgrades in manufacturing processes, datacenter expansions and the rollout of fifth-generation or 5G wireless networks. Having learned its lesson from previous industry slumps, Samsung was confident it could maintain a balance between supply and demand for memory chips, the people said, asking not to be identified talking about internal deliberations. Their prime concern was avoiding a repeat of the oversupply that triggered a chip price crash in 2019, they said.The industry is still toting up the impact of the pandemic. In a positive scenario, analysts expect pent-up demand for smartphones and sustained use of online learning and work-from-home gear like laptops to engender a soft-landing for Samsung later this year. Just a week ago, Qualcomm Inc. and Western Digital Corp. said they were seeing a recovery in demand from Chinese consumers for phones and computer disk drives. And Micron Technology Inc. has predicted stronger-than-expected revenue.What Bloomberg Intelligence SaysMemory chips are likely in tight supply due to disruptions in obtaining certain raw materials and equipment on the Covid-19 outbreak. This may bolster DRAM and NAND sentiment following rising contract prices in March, supported by rising remote work access needs, despite an extended smartphone shipment slump to 2Q.\- Anthea Lai and Anand SrinivasanClick here for the research.It may well be that the disease will encourage shifts in consumer activity that benefit the industry in the long run, said C.J. Muse, senior managing director at Everscore ISI in New York.“The world is changing,” said Muse. “There is clearly something that, over the long term in this kind of virus world, should be positive, given how our lives are evolving and how important the cloud is to a lot of what we do now and even more than ever.”Read more: ‘Nightmare’ for Global Tech: Virus Fallout Is Just Beginning(Corrects Trendforce’s forecast in seventh paragraph to refer to industry, not Samsung, shipments)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Samsung’s Profit Beat Showcases a Rare Bright Spot in a Pandemic

    Samsung’s Profit Beat Showcases a Rare Bright Spot in a Pandemic

    (Bloomberg) -- Samsung Electronics Co.’s better-than-expected profit revives hopes that a surge in internet usage from people sheltering in place during the Covid-19 pandemic will help make up for a drop-off in demand for smartphones and other consumer electronics.Shares in Korea’s largest company climbed more than 3% after it posted operating profit of 6.4 trillion won ($5.2 billion) in the March quarter, surpassing the average analyst estimate by 3.6%. Sales rose 5% to 55 trillion won, according to preliminary results released Tuesday. The company didn’t provide net income or break out divisional performance, which it will do later this month when it releases final numbers.Samsung -- one of the first major technology corporations to unveil March quarter results -- demonstrates how the novel coronavirus outbreak is exerting an uneven impact on the global electronics sector in the short term. Soaring online activity from gaming to video streaming is driving sales of semiconductors -- the lubricant for the internet and Samsung’s most profitable business -- even as worsening employment prospects curtail spending on gadgets such as the company’s just-released flagship Galaxy S20.The Asian giant’s solid performance underscores expectations for resilient chip demand since Micron Technology Inc.’s stronger than anticipated outlook. That lifted Asian chipmakers such as Taiwan Semiconductor Manufacturing Co. and Nanya Technology Corp. Much now hinges on whether governments can mitigate the fallout from potentially the worst global economic shock in at least a generation.“Right now, we can only project a picture of the second quarter: soaring demand in server chips may offset slump in display, mobile and consumer electronics,” said Song Myung-sup, analyst at HI Investment & Securities Co. in Seoul. “The problem is, if the Covid-19 pandemic continues further, we can’t guarantee that the uptrend in expansion of servers will be sustainable in the second half of this year.”Samsung’s Symptom-Less Earnings Don’t Make It Immune: Tim CulpanAs the world’s largest maker of memory chips, phones, displays and appliances, Samsung is broadly exposed to the economic shocks of Covid-19. Despite Tuesday’s rally, the company’s shares remain down about a fifth since their January 2020 peak. The better-than-expected result unveiled Tuesday was helped by the South Korean won weakening about 5% against the dollar in the first quarter, lifting the value of income repatriated from overseas.Should the pandemic persist into the second half -- a worst-case scenario -- the tech giant foresees missing its own 2020 revenue projections by a double-digit percentage, according to people familiar with internal discussions. It’s grappling with plant shutdowns and store closures this quarter alongside rivals and customers like Apple Inc. and Huawei Technologies Co. At the same time, memory chipmakers have experienced rising demand and prices for DRAM and flash memory used in data centers and cloud service operators.Read more: Working From Home Gives Chipmakers Boost While Others SufferWhat Bloomberg Intelligence SaysSamsung Electronics’ strong 1Q operating profit beat may affirm rival Micron’s upbeat expectations for memory chip demand, despite the Covid-19 outbreak. DRAM contract prices rose in March after reaching a bottom in December, while those for NAND inched up from late 3Q. Chipmakers’ wafer cuts may tighten supply and restore inventory to normal levels.\- Anthea Lai, analystClick here for the research.Contract prices for 32-gigabyte DRAM server modules rose roughly 12% in the March quarter, according to InSpectrum Tech Inc. Prices for 128-gigabit MLC NAND flash memory chips increased about 5.6% in the first three months of 2020. Thanks to growing demand for online services from video-conferences to e-commerce and gaming, prices of server DRAM and enterprise SSD or solid-state drives are projected to keep growing in the current quarter. TrendForce raised its price-growth forecasts on server DRAM to 20%, while it expects enterprise SSD prices to rise by as much as 15%.“The growing demand for server DRAM led to low inventory levels for both clients and suppliers,” TrendForce said in an April 1 note. “Also, following a new round of tenders from Chinese telecom operators in February, the supply of server DRAM has become much tighter, in turn maintaining the upward pull on server DRAM prices.”Samsung’s hardest-hit business was mobile because of disappointing demand for S20 devices released in early March. In the first quarter, the company shut its key Gumi plant several times after discovering infection among employees, prompting the shift of some of output to Vietnam. Lockdowns of major cities and store closures across North America have depressed overall business. Hana Financial Investment expects Samsung to report 62.2 million unit shipments of smartphones for the first quarter of 2020, compared with 71.5 million units a year earlier.“Although semiconductor earnings look set to increase on the back of memory chip price hikes, the divisions selling finished products” will likely see their earnings decline, said Greg Roh, senior vice president at HMC Securities.Samsung’s Beauty and Beast: Fully ChargedFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Bloomberg

    Samsung's Symptom-Less Earnings Don't Make It Immune

    (Bloomberg Opinion) -- Earnings released early Tuesday by Samsung Electronics Co. show that the technology giant dodged any major impact from the Covid-19 pandemic. Expect that to change.Revenue growth was the strongest in six quarters, though 5% is hardly stellar. And while it was in line with estimates, analysts had been trimming expectations over the past few months. That also applies to the better-than-forecast operating profit, with analysts having lowered the bar in recent weeks.Investors should also note that earnings are reported in Korean won. Samsung’s numbers may have been helped by the fact that the won weakened 6.1% against the U.S. dollar in the quarter, the most in more than four years (the currency swung wildly during the period, so the company’s average exchange rate may have been different).With the coronavirus having shut down swathes of the global economy, any growth is to be lauded. Peers including Apple Inc. aren’t likely to have performed as well. But don’t be fooled into thinking that Samsung is in the clear. Much of the strength during the period probably came from its chip business, driven by the needs of internet companies like web-conferencing provider Zoom Video Communications Inc. These have had to boost server capacity to cope with higher demand from employees forced to work from home amid the pandemic.More than 40% of Samsung’s revenue comes from handsets. This sector was already looking lackluster before the coronavirus outbreak. Now, with the U.S. having reported an astonishing 10 million new jobless claims within two weeks, much of Europe on lockdown, and most of Asia in varying degrees of economic strife, it’s unlikely that consumers are eager to pony up for a flashy new smartphone.Apple’s largest supplier has already felt the pinch. On Monday, its Taiwanese assembler Hon Hai Precision Industry Co. announced first-quarter revenue dropped 12%. While Apple accounts for half of Hon Hai’s sales, the other half comes from a broad collection of companies including Dell Technologies Inc., HP Inc. and Xiaomi Corp. It’s unlikely any of them will come through this economic downturn unscathed.Samsung has the strength, and most importantly the cash, to ride out what will certainly be a tough few quarters for the global economy. That size doesn’t give it immunity.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Samsung first-quarter beats estimates; chips likely to prop up virus-hit second-quarter

    Samsung first-quarter beats estimates; chips likely to prop up virus-hit second-quarter

    Samsung Electronics Co Ltd said on Tuesday its first-quarter operating profit likely managed to rise slightly from a slump a year earlier, as solid chip sales helped cushion the blow from the coronavirus pandemic on smartphones and TVs. The global leader in semiconductors is benefiting from higher demand for chips from laptop makers and data centres amid the coronavirus-driven shift to working from home, even as its mobile and consumer electronics businesses suffer. Samsung said operating profit was expected to be 6.4 trillion won (4.24 billion pounds) in the quarter ended March, compared with 6.2 trillion won a year ago and the 6.2 trillion won estimate from analysts according to Refinitiv SmartEstimate.

  • Retail Investors Pump Money Into Korean Stocks Like Never Before

    Retail Investors Pump Money Into Korean Stocks Like Never Before

    (Bloomberg) -- While the pros are shunning Korean stocks, the nation’s mom-and-pops are diving right in.The benchmark Kospi index has rebounded almost 20% from a low in March, even as foreign and local funds kept fleeing the market, offloading some 24 trillion won ($19.5 billion) net of the gauge’s shares this year. That’s because retail investors -- known as “patriotic ants” for their herd behavior that’s propping up the market -- have been buying at a record pace. They’ve added 22 trillion won net of the equities, including the biggest quarterly additions since Bloomberg began compiling the data in 1997.Known for their appetite for products ranging from complex structured notes to risky hedge funds, Korea’s individual traders usually favor short-term, speculative bets and account for nearly 60% of Kospi volume, according to NH Investment & Securities Co. The recent Bank of Korea rate cut is now also drawing wealthy investors with a long-term view to the nation’s $1 trillion stock market, Samsung Securities Co. said.“Most retail investors were speculative traders, but recently I saw many wealthy people coming to the stock market,” said You Seung-Min, chief strategist at Samsung Securities. “Bank of Korea’s 50 basis-point cut seems to have shocked them. The government’s stronger regulations on real estate are pushing them to seek a return from stocks.”Their favorite pick has been Samsung Electronics Co., the nation’s biggest stock, followed by peer SK Hynix Inc. Both have tumbled 16% this year. On Naver Corp., the nation’s biggest portal website, at least 80 community posts read, “Do you think it’s the right time to buy Samsung Electronics?” or “Samsung will never fail, it’s like a bond.”“Samsung’s stock is probably a good investment for retail investors, as it is planning to offer about a 3% dividend yield for this year, higher than the interest rate in Korea,” said Chung Chang-won, an analyst at Nomura Financial Investment (Korea) Co. who noted it has become easier to invest in the shares since a split in 2018.Korean regulators said in a Thursday statement that retail investors should refrain from “reckless buying” of the nation’s equities, especially with borrowed money. Leveraged investments in the market hit 10.5 trillion won on Feb. 25, the highest since June 2019, according to the latest data from the Korea Financial Investment Association.“There is at least 1,000 trillion won of floating money in Korea,” Chung said. “They really have nowhere to invest.”(Corrects Nomura entity in story published April 3)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Solid chip sales unlikely to cushion Samsung's virus-hit first quarter profit

    Solid chip sales unlikely to cushion Samsung's virus-hit first quarter profit

    The coronavirus-driven global shift to working from home is set to have boosted demand for Samsung Electronics' memory chips from laptop makers and data centres, but first-quarter profits are likely to remain flat as the outbreak weakened consumer electronics sales. The South Korean tech giant is the world's largest memory chip maker, and its Galaxy smartphones are a major rival of Apple Inc's products. Samsung, which also makes home appliances and displays, on Tuesday releases guidance for the January-March quarter profit which is widely expected to be unchanged, and come under pressure in the next few quarters as the impact of coronavirus-related factory and retail stores shutdowns bites.

  • Bloomberg

    Cash and Credit Cards Are Dirty. Apple Pay Is Looking Better.

    (Bloomberg Opinion) -- Cash is dirty. Credit cards may be even dirtier. That’s a problem in this new germophobic world created by the coronavirus. There will likely be new winners and losers as consumers shift to products and services that help them keep their social distance even after this outbreak subsides. Is it finally time to embrace the digital wallet?Take Apple Inc.’s Apple Pay, a service that stores your credit-card information and lets you pay for purchases via your iPhone. The tech giant launched the product six years ago, but it didn’t bring about the revolution it hoped it would, where mobile payments lead the move toward a cashless society as it had in China. Here in the U.S., there just wasn’t a compelling enough reason for many consumers to change their entrenched routines. Now, though, Apple Pay’s ability to let customers shop inside physical stores and pay for things without having to make physical contact with a counter or card-reader may be the catalyst it needs to finally disrupt the payments industry.My own habits are noticeably changing on this front. Though I had my card information inside Apple Pay for years, I rarely ever used it. Old habits die hard, and I simply didn’t mind pulling out my credit card and paying for things the usual way. Nowadays? Not so much. Due to virus fears, I would rather not tap on a payment terminal’s numeric key pads or use my finger to sign for purchases when there is a much cleaner alternative. As a result, Apple Pay has now become the main way I pay for things whenever I venture outside.The way Apple Pay works is, you type in your credit card information into the Apple Wallet app. Once entered, you can pay for items at most physical store retailers by double-clicking the power button, authenticating using Face ID or Touch ID and then hovering your iPhone a few inches above the payment terminal. Google Pay and Samsung Pay work similarly on their respective smartphones. This type of proximity-based mobile payment enables consumers to pay for items without touching or handing over anything.  Traditional paper bills and physical card payment alternatives are filthy in comparison. An academic study cited by Mastercard found the average cash note has 26,000 bacterial colonies. And according to LendEDU, a personal finance products comparison website, credit cards contain even more germs than cash or New York City subway poles. It makes sense as cards are often put on tables, inside restaurant bill folders and are rarely cleaned, while cash is constantly circulated by hand.Yes, the credit-card companies are rolling out their own version of contactless or “tap-to-pay” payments. Visa and Mastercard both said in their most recent reported quarters that about one-third of global transactions are now contactless. But the usage rate of the new cards is much lower in the U.S. as many Americans have yet to receive them. Further, it still requires touching the physical card and tapping the terminal (or at least getting the card within a couple of inches). This year, Apple Pay will command 47% of the U.S. proximity-based mobile payment market, with Google capturing 19% and Samsung Pay 17%, according to an eMarketer forecast.Admittedly, the U.S. market is still small, and expectations were relatively muted heading into this year before the pandemic struck. Only about 33 million Americans were expected to use Apple Pay’s proximity-based payment feature in 2020, or 14.5% of smartphone users, according to an eMarketer forecast made in September. But things are a lot different now.If Apple Pay and its brethren do take off, there will be deeper ramifications across the industry. Credit-card companies will do fine because their card networks are still being utilized by the smartphone maker’s service. But it could be a negative for PayPal Holdings Inc., the payments company that dominates the adjacent market of digital checkout buttons for online retailers.PayPal’s e-commerce checkout button enables its users to pay for online orders on retailer websites without having to re-type address or payment information, reducing friction to complete orders. It is a critical cash cow for the company and accounts for nearly 90% of its earnings, according to MoffettNathanson.But Apple Pay also offers a competing digital checkout feature. And if Apple Pay became increasingly used inside physical stores, it seems likely customers will be inclined to use the service for e-commerce transactions as well, eating into PayPal’s business.With new consumer habits being formed in a coronavirus world, Apple’s gain may be PayPal’s pain.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Tae Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron's, following an earlier career as an equity analyst.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Bloomberg

    Foxconn Assures Investors 5G iPhone Can Still Launch This Fall

    (Bloomberg) -- Apple Inc.’s most important manufacturing partner has reassured investors it can still get the latest 5G-enabled iPhones ready for an autumn launch despite global Covid-19 upheaval.Hon Hai Precision Industry Co., which makes most of the world’s iPhones, told investors it’s lost time to travel restrictions and other disruptions caused by the coronavirus pandemic. But with months to go before the first trial assembly lines start up in June, Hon Hai can still make the deadline, investor relations chief Alex Yang said on a private conference call hosted by Goldman Sachs.Hon Hai, known also as Foxconn, struggled through much of February after the Covid-19 outbreak delayed the return of the hundreds of thousands of workers it needed to assemble iPhones and other electronics. While it’s since resumed normal operations, the month-long hiatus cast Apple’s carefully calibrated product launch schedule in doubt. Much now depends on the course of the pandemic and a postponement remained very much on the cards though the new iPhones should emerge in time to catch the crucial holiday season, Yang said.“We and the customer’s engineers are trying to catch up the missing gap, after we lost some days due to travel ban. There’s opportunity and possibility that we might catch up,” Yang said. “But if there’s a further delay in the next few weeks, months, then you probably have to reconsider launching time. It’s still possible.”Foxconn said in a statement Wednesday’s conference call was intended to communicate its thoughts on the latest developments affecting the consumer electronics industry and not focused on any specific products or customer.Read more: Apple’s Supply Chain Woes Linger Even as China RecoversThe next iteration of Apple’s signature device may well be one of its most important in years -- an iPhone that can make full use of the fifth-generation wireless networks that promise much faster video and gaming. The U.S. company is already a step behind Samsung Electronics Co. and Huawei Technologies Co., which began selling 5G devices last year.Covid-19 is now jeopardizing Apple’s plans. Mass assembly is only one part of the iPhone maker’s supply chain, which encompasses hundreds of suppliers. Apple and its many partners spend months or even years sourcing individual components that are assembled into final products. Any disruptions to that complex network could slow the introduction of future devices. Trial assembly typically begins in early June and -- once finalized -- mass production commences in August, Yang outlined.As China’s largest employer and manufacturer of a plethora of electronics brands, Hon Hai encapsulates how the outbreak disrupted the global supply of made-in-China electronics. Apple scrapped its revenue guidance for the March quarter after the contagion disrupted its production chain: Hon Hai was forced to postpone the reopening of its “iPhone City” mega-complex in the central city of Zhengzhou while it imposed strict quarantine measures on thousands of laborers. But Foxconn has since sharply raised signing bonuses to attract new workers and said it reached full seasonal staffing level earlier than an original target of late March.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Huawei Warns of ‘Pandora’s Box’ If U.S. Curbs Taiwan Supply

    Huawei Warns of ‘Pandora’s Box’ If U.S. Curbs Taiwan Supply

    (Bloomberg) -- Huawei Technologies Co. is bracing for its most difficult year on record in 2020, when tightening U.S. sanctions and the Covid-19 pandemic threaten to slam an already slowing business.Rotating Chairman Eric Xu said he’s aware of the potential for Washington to tighten restrictions on the company, including by stopping Taiwan Semiconductor Manufacturing Co. from selling chips to Huawei. The Chinese government wouldn’t tolerate such action and it would irrevocably damage the global supply chain, Xu said in some of Huawei’s strongest comments against the Trump administration’s measures so far.“If the Pandora’s box were to be opened, we’ll probably see catastrophic damage to the global supply chain -- and it won’t just be one company, Huawei, destroyed,” Xu told reporters after unveiling 2019 earnings. “I don’t think the Chinese government will just watch and let Huawei be slaughtered on a chopping board. I believe the Chinese government will also take some countermeasures.”China’s biggest tech company remains in Washington’s cross-hairs even as Covid-19 spreads across the globe. The White House is reportedly considering imposing restrictions on the sale of semiconductors to Huawei by global corporations such as TSMC and Samsung Electronics Co., a move that would effectively deprive the Chinese giant of the most advanced chip technology. That would escalate already damaging restrictions on Huawei, which on Tuesday reported net profit grew 5.6% -- the slowest pace of bottom line growth in three years.“Why can’t China ban the use of American 5G chips, base stations, smartphones and other smart devices based on the same network security reasons?” Xu said, adding he couldn’t confirm reports about curbs on TSMC.Huawei had previously reported sales growth of about 19%, to 859 billion yuan ($123 billion) in 2019, roughly the same as in the previous year. And the Shenzhen-based company’s profit improved to 62.7 billion yuan. But Xu said 2019 was its most difficult year yet, when it was forced to transform its business after expansive scrutiny and sanctions from the U.S. The effort to contain Huawei -- and by extension, China -- forced the company to turn inward.The Trump administration’s campaign to get allies such as Japan and Australia to shut out Huawei gear and phones helped drive sales in the Asia-Pacific down 13.9%, though that was more than offset by a surge at home in China.In the fourth quarter alone, which was most impacted by the U.S. prohibition on Huawei selling Android phones with Google’s mobile services, the company shipped roughly 55 million devices, calculated from the difference between its September shipments update and the year’s total. Of the 240 million Huawei and Honor phones shipped, 6.9 million had fifth-generation wireless networking, an area where the company remains a tech leader.Pelosi Joins Trump in Warning Europe of Huawei’s 5G ThreatContrary to warnings from American lawmakers and diplomats, numerous European countries like the U.K. and Switzerland have opted to use Huawei’s technology in building out their 5G networks. The U.K. and Germany have both echoed U.S. concerns about how far Huawei can be trusted with key infrastructure of the future, but those have not extended to the severity of an outright ban.Huawei faces tremendous pressure in overseas smartphone markets, where the U.S. ban on its use of Google Mobile Services severely undercuts the appeal of its devices. Without the Google Play Store and third-party app ecosystem, Huawei phones simply can’t compete with similarly capable alternatives from the likes of Samsung Electronics Co. and OnePlus. The company reported flat revenue in Europe, the Middle East and Africa alongside the drop in the Asia-Pacific. Those regions were two of its major growth engines in 2018, whereas now 59% of its sales are at home in China.China’s ambitious 5G network construction projects, which started in the second half of last year, also helped Huawei weather the international storm and sustain its core businesses.Huawei Makes End-Run Around U.S. Ban by Using Its Own ChipsFounder Ren Zhengfei initially estimated that Huawei’s May 2019 blacklisting by the U.S. could wipe $30 billion off annual revenues and threaten his company’s very survival, though he has tempered that outlook more recently. Huawei mobilized a massive effort to develop in-house alternatives to American software and circuitry, while U.S. suppliers like Intel Corp. and Microsoft Corp. found ways to continue supplying Huawei vital components it needed to make its products. Huawei is also selling base stations free of American technology in another effort to bypass the U.S. ban.With no relief from U.S. sanctions in sight and the coronavirus pandemic stifling business across all industries, Huawei anticipates its most difficult year yet. Chinese smartphone sales, which the company is now particularly sensitive to, are already hurting. And its global 5G installations, for which Huawei has secured more than 90 contracts worldwide, are hitting the brakes with many countries implementing lockdowns and the global economy at a standstill.(Updates with top executive’s comments from the second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Working From Home Gives Chipmakers Boost While Others Suffer

    Working From Home Gives Chipmakers Boost While Others Suffer

    (Bloomberg) -- As the coronavirus prompts talk of an earnings recession for most Asian emerging stocks, there’s an industry that’s holding up: chipmaking.The worldwide lockdowns due to the virus and the ensuing contractions in output have sparked indiscriminate selling across industries, and dismal earnings forecasts for this quarter and beyond -- except for the tech industry.Micron Technology Inc. last week reported adjusted earnings that beat Street estimates by 24% and predicted stronger-than-expected revenue, fueling optimism about other chipmakers’ prospects. With most of the population in major economies worldwide working or learning remotely, online and ecommerce services are booming, stoking demand for cloud storage and a recovery in memory-chip prices.“Definitely, demand for server chips is on the rise as people increasingly go on a shopping spree online and are working remotely with laptops,” said Lee Seung-Hoon, head of equity at DB Asset Management. “For the tech industry, demand for handsets and home appliances has been hit. But this new trend suggests chipmakers could rebound faster than other industries, once virus infections peak.”The earnings season kicks off in April with investors keen to look beyond the abysmal first quarter. Samsung Electronics Co., the world’s largest memory chipmaker, will give a clearer picture of the industry’s outlook in its preliminary earnings release scheduled next week. The company’s shares have been the most sold by foreigners among Kospi members in March.Shares of Samsung Electronics fell as much as 1.5% in Seoul, erasing an earlier gain. Peer SK Hynix Inc. was down as much as 2%.Here are three charts with evidence that global chipmakers have better prospects than most industries this earnings season:Korean ExportsKorea’s preliminary semiconductor exports gained further in March, extending a rebound from a low in late 2019, shrugging off the effects the global coronavirus outbreak.The advance contrasts with a slump in the Bloomberg Asia Semiconductor Index because of concern the virus would disrupt supply chains and destroy demand.Micron’s EarningsMicron Technology’s forecast-topping earnings and optimistic sales outlook bode well for other chipmakers in Asia and elsewhere, offsetting slow demand for smartphones and home appliances.DRAM PricesThe chipmaking industry’s earnings cycle has historically moved in tandem with semiconductor prices.DRAMeXchange has raised its DRAM server chip price forecast for the second quarter to a gain of 20%, up from its earlier forecast for a gain of 15%, citing growing demand from server manufacturers and cloud service providers.(Adds share price moves in sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Samsung Display to end all LCD production by end 2020

    Samsung Display to end all LCD production by end 2020

    South Korean panel maker Samsung Display has decided to end all of its production of liquid crystal display (LCD) panels in South Korea and China by the end of this year, a spokeswoman said on Tuesday. Samsung Display, a unit of South Korean tech giant Samsung Electronics Co Ltd , said in October that it suspended one of its two LCD production lines at home amid falling demand for LCD panels and a supply glut. "We will supply ordered LCDs to our customers by the end of this year without any issues," the company said in a statement.

  • Samsung says chip factory worker tests positive for virus, output not affected

    Samsung says chip factory worker tests positive for virus, output not affected

    Samsung Electronics Co Ltd said on Tuesday that one of its chip factory workers in South Korea had tested positive for coronavirus, but its output has not been affected. This is the first time a Samsung chip factory employee has tested positive for the virus, although several confirmed cases at the tech giant's smartphone factory in South Korea's southeastern city of Gumi resulted in a temporary suspension. "One of our employees at our Foundry fab in Giheung, Korea, has tested positive with COVID-19," Samsung said in a statement, referring to the respiratory disease caused by the virus.

  • Microsoft Deal Values Affirmed Networks at $1.35 Billion

    Microsoft Deal Values Affirmed Networks at $1.35 Billion

    (Bloomberg) -- Microsoft Corp.’s agreement to acquire 5G software maker Affirmed Networks Inc. valued the company at about $1.35 billion, according to people familiar with the matter.Microsoft announced the deal on Thursday without disclosing financial details.Microsoft already serves telecom customers and struck an agreement with AT&T Inc. last year with the aim of moving more the carrier’s network to its platform. Microsoft has been building its cloud computing operations through acquisitions. In 2018, it bought privately held GitHub for $7.5 billion.Affirmed Networks also held talks with Samsung Electronics before its deal with Microsoft came together, one of the people said.Pete Wootton, a spokesman for Microsoft, declined to comment on the price. A representative for Affirmed Networks also declined to comment. Samsung didn’t respond to a request for comment.Microsoft shares fell 4.1% Friday to close at $149.70.The introduction of 5G is just starting, with test projects by carriers such as AT&T generally limited to select big cities. Nationwide U.S. coverage may take years. But tech giants and telecom industry incumbents have been angling for a slice of the market for edge computing and going after big corporate customers. The White House has made 5G a linchpin of its tech policy, particularly as it tries to suppress the global expansion of China’s Huawei Technologies Co.The networking industry is transitioning away from expensive fixed purpose machines that take care of specific parts of the job of managing the flow of data to software that resides in remote data centers. The aim is to make the things cheaper and more flexible.Affirmed Networks helps build virtual networks for telecom customers using 5G technology. It was founded in 2010 and had raised about $240 million in funding, according to Pitchbook Data. It raised financing just last month at a $1.35 billion valuation, people familiar with the matter said.Affirmed Networks said on Thursday that it was replacing its chief executive officer with one of its founders, Anand Krishnamurthy.Affirmed Networks, based in Acton, Massachusetts, is backed by investors including Qualcomm Ventures and Centerview Capital Technology Management, the venture arm of investment bank Centerview Partners, as well as by Lightspeed Management, CRV and Bessemer Venture Partners,(Updates with line on Samsung’s interest in fourth paragraph, adds share price in sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Sony Says Virus Disruptions May Hit Profit, Delay Reporting

    Sony Says Virus Disruptions May Hit Profit, Delay Reporting

    (Bloomberg) -- Sony Corp. said fallout from the coronavirus may wipe out a previously projected increase in its profit and force it to delay an earnings report scheduled for April.The Japanese company said two factories in China are returning to normal operation but continue to face component shortages, while facilities in Malaysia and U.K. will remain shut until middle of April because of government requests. Sony said it can’t dispatch employees to these locations to discuss assembly of new products.Sony had raised its forecast on Feb. 4, saying operating income will probably reach 880 billion yen ($8.1 billion) in the year ending March 31, compared with the 840 billion yen forecast in October. If profit comes in at the earlier figure, that would be a shortfall of about $370 million.“Given their high exposure to consumer spending, it is not surprising that COVID-19 is having an adverse impact on their business,” said Damian Thong, an analyst with Macquarie Capital.Sony joins a growing list of corporations forced to revise or scrap financial forecasts because of the virus.Apple Inc., Expedia Group Inc., and Twitter Inc. are among the technology companies that have withdrawn or modified guidance in the wake of the pandemic, which has disrupted supply chains, upended demand and forced millions of people to work from home. On Thursday, Dell Technologies Inc. and VMWare Inc. became the latest to withdraw their earnings outlooks.Sony had been benefiting from strong demand for the image sensors that power smartphone cameras, but production and sales of such devices have taken a hit in recent weeks. It supplies Apple and Samsung Electronics Co., among others.A Sony spokeswoman said it doesn’t see any notable impact on the launch of its next-generation game console PlayStation 5 planned at the end of this year.Sony shares have slid about 10% this year.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Olympics delay deals setback to Samsung's plans to win over Japan market

    Olympics delay deals setback to Samsung's plans to win over Japan market

    For Samsung Electronics Co Ltd , the 2020 Tokyo Olympics were going to be its springboard to attain a long-held goal - making significant inroads into Japan's lucrative smartphone market where Apple Inc dominates. It had been expected to tout its 5G capability in its Olympics ads, aiming to attract a population excited to watch the Games with cutting-edge technology before Apple had a 5G product on the market.

  • Micron Gives Strong Outlook Lifted By Data-Center Demand

    Micron Gives Strong Outlook Lifted By Data-Center Demand

    (Bloomberg) -- Micron Technology Inc. predicted stronger-than-expected revenue helped by a surge in orders from data center operators who are building more capacity to deal with the expansion of people working from home.Revenue will be $4.6 billion to $5.2 billion in the fiscal third quarter, which ends in May, Micron said Wednesday in a statement. Analysts had projected $4.88 billion, according to data compiled by Bloomberg. Adjusted earnings will be 55 cents a share, plus or minus 15 cents. Analysts, on average, estimated 52 cents a share.Micron is one of the first chip industry companies to report earnings and give predictions since millions of people have been told to stay home to help slow the spread of the Covid-19 pandemic. That huge shift in the workforce has placed a greater strain on the internet’s infrastructure, spurring demand for Micron’s memory chips and making up for some of the shortfall in orders for smartphone components, as shoppers stay away from stores.“In the data center market, we benefited from strong demand for our products from key cloud and enterprise customers, driven in part by ongoing strength in cloud markets, increased use of online properties such as e-commerce, and the surge in remote-work requirements due to COVID-19 containment measures,” Micron Chief Executive Officer Sanjay Mehrotra said in prepared remarks posted on the company’s website.In a slide presentation, Micron also cited increased gaming activity. While the markets for smartphones, consumer electronics and autos are below previous expectations, Micron said it’s seeing an increase in demand for notebooks to support work at home and virtual learning.The company has two employees who have tested positive for the virus. Through efforts to quarantine them, there hasn’t yet been an impact on the company’s manufacturing output, Micron said. The Boise, Idaho-based company has plants in Singapore, Malaysia and Japan, where the spread of the virus was felt sooner. That raised concern Micron’s output would slow. The company, however, said it has resumed manufacturing in Malaysia and found testing and assembly facilities in other parts of the world to help.“Micron still has ample inventory that would limit a near-term supply chain disruption,” Cowen and Co. analyst Karl Ackerman wrote in a report before the results were released. “The supply bottleneck has morphed into a demand challenge, however, and our field work on the smartphone and PC supply chains indicates low visibility for second calendar-quarter production.”The company makes dynamic random access memory chips, which help processors crunch data in computers and smartphones, and Nand flash memory, which stores information in those devices. Memory used in servers is typically more expensive and chips used in storage for those machines also usually commands a higher price.Micron cautioned that its numbers are a lagging indicator of orders for end products and that some customers may be stockpiling chips, which may mask the true picture of demand.Shares rose about 5% in extended-trading following the report. They closed at $42.50 earlier on Wednesday, leaving them down 21% this year.Net income in the period ended Feb. 27 fell to $405 million, or 36 cents a share, from $1.62 billion, or $1.42 a share, a year earlier. Revenue declined 18% to $4.8 billion. Micron’s biggest competitors are South Korea’s Samsung Electronics Co. and SK Hynix Inc.(Updates with comments from CEO in the fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Bloomberg

    Shielded from Pandemic, Work Continues in World’s Cleanest Room

    (Bloomberg) -- A two-hour drive south of Amsterdam in Veldhoven, workers decked out head-to-toe in protective gear toil in vast assembly halls. Before entering the inner sanctuary of the facilities, they meticulously layer on masks, gloves and special socks. A single speck of dust or a hair can have devastating effects on production. The result of all this painstaking process is an environment that is 10,000 times more purified than outside.And as the coronavirus grips the world, it might just be the safest place to work right now.The teams belong to ASML Holding NV, which holds a de-facto monopoly on the industry of extreme ultraviolet lithography machines needed to make next-generation chips. Each cost about 150 million euros ($160 million) apiece and ship mainly to the U.S., Korea and Taiwan, where the likes of Intel Corp., Samsung Electronics Co. or Taiwan Semiconductor Manufacturing Co., known as TSMC, rely on them to make faster, cheaper and more energy efficient semiconductors.ASML manufacturing staff operate in an environment that is literally shielded from the coronavirus pandemic that has forced millions of workers around the world to isolate themselves from colleagues to slow the spread of the disease. As the rest of the Netherlands and much of the continent locks down, work in ASML’s Veldhoven clean-rooms has continued largely unhindered, potentially giving the company an edge for when corporate life returns to normal.“So far we have been able to keep our production going,” said Frits van Hout, ASML’s chief strategy officer, ASML. “The situation is of course dynamic. We encounter challenges as with every lockdown our suppliers will be affected, directly or indirectly.”Keeping DistanceLike other companies, ASML has also implemented a raft of contingency measures –from segmenting staff to drawing up plans if disaster strikes at a key supplier -- so it can keep manufacturing equipment for chip-makers around the world. Workers are split into two teams and are screened for virus symptoms via infrared thermal cameras at the entrance of the clean room in Veldhoven.Social distancing protocols are in effect, and the company has spaced out the morning and night shift to ensure the groups don’t meet, ASML said.Clean rooms are highly specialized infrastructure that’s costly to set up and maintain, making that kind of environment difficult to replicate in other industries. The biggest risk for the company lies not so much in its own operations seizing up but in a potential breakdown of its 5,000 suppliers, 790 of which provide materials and equipment that are used directly to produce the ASML systems.Besides its ultra-sanitized work environment, ASML has the benefit of making machines that are considered almost recession-proof, given its commanding lead in an industry on the cusp of another technological leap: high-speed 5G networks.On Track“Most customers want EUV and if ASML cannot deliver due to such a factor, then they know they have to wait until the next quarter because you cannot get it anywhere else,” said Marcel Achterberg, executive director of equity research at KBC Bank.The prized EUV machines are the size of a bus. Customers can order older equipment, but EUV delivers better resolution, smaller components and improved performance in the chips it produces.They’re a crucial source of revenue for ASML’s customers, too. By the end of next year, as much as half of TSMC’s revenue will depend at least partly on some EUV processes, according to Bloomberg Intelligence analyst Masahiro Wakasugi.Volume production of TSMC’s most cutting-edge 5-nanometer chips, which use EUV, is still “on track” for the first half of 2020 as previously stated by management, TSMC spokeswoman Nina Kao saidFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Apple’s Supply Chain Woes Linger Even as China Recovers

    Apple’s Supply Chain Woes Linger Even as China Recovers

    (Bloomberg) -- Apple Inc. kept its business rolling through the coronavirus pandemic this week by launching a new iPad Pro and two new Macs. But that doesn’t mean its supply chain is in the clear.Deliveries of the new products will begin arriving on doorsteps next week. However, production of those devices likely started in early January, before the worst effects of China’s virus lockdown in February, according to people familiar with Apple’s supply chain.With a fresh round of supplier factory closures enforced by Malaysia, and the virus disrupting operations in much of the rest of the world, the iPhone maker’s supply chain has not fully recovered yet.Apple’s next flagship iPhones, with 5G wireless capabilities, are still on schedule to launch in the fall, although that’s partly because mass production isn’t due to begin until May, said the people. They asked not to be identified discussing private supply chain issues.“Even as China comes back on line, we are beginning to wonder if Covid-19 will impact other supply oriented geographies,” Brad Gastwirth, chief technology strategist at Wedbush Securities, wrote in a recent note to investors. “While China is improving, the supply chain for the electronics industry may yet see substantial disruptions.”An Apple spokesman declined to comment. Chief Executive Officer Tim Cook, the architect of the company’s China-focused supply chain, said Feb. 28 that production issues would be a “temporary condition.”Apple’s assembly factories in China, run mainly by Hon Hai Precision Industry Co., were in low gear for much of February. The manufacturing giant, also known as Foxconn, hopes to begin operating normally by the end of March.The February slowdown led to iPhone and AirPods supply constraints, but those have begun to subside. This week, Apple has been limiting iPhone purchases to two per customer on its online store in several countries. In early March, the company warned retail employees about shortages of replacement iPhones.One new product unveiled this week suggests there’s strain on Apple’s supply chain, but also shows the company can still mass produce gadgets given enough time. The keyboard accessory for the iPad Pro was announced Wednesday but goes on sale in May, an unusual delay.Read more: Supply Shock Is Wiping Out Hopes of Smartphone Sales GrowthMass assembly is only one part of Apple’s supply chain. The company and its many partners spend months or years sourcing individual components that are assembled into final products. Any disruptions in this complex network could slow the introduction of future devices.One person who works in Apple’s supply chain said not all operations are moving at normal speed because the flow of components to assemble is still slow. It will take another month or more to get parts moving steadily through the system, the person added.Jabil Inc., which makes iPhone casings, recently said its factories in China were “near normal,” while plants in other parts of the world were running 5% to 10% below capacity.“Most of that is due to supply chain issues. In some odd way, as we sit today, I think China is the least of our concerns,” CEO Mark Mondello told analysts during a March 13 conference call. “We’re able to accommodate all of the demand that’s in front of us as long as we can get parts.”A two-week lockdown in Malaysia is affecting several key suppliers that have operations in the country. Murata Manufacturing Co., Renesas Electronics Corp. and Ibiden Co., which make chips and circuit boards for Apple, have halted production there.Micron Technology Inc., which makes memory chips for Apple devices, is also impacted, but said an exemption allows “limited semiconductor operations to continue.” Texas Instruments Inc. and On Semiconductor Corp. have facilities in Malaysia, too.Apple has suppliers and operations in other countries that have been hammered by the virus, including Italy, Germany, the U.K. and South Korea.Samsung Display and LG Display Co. make iPhone screens in South Korea, while many Apple engineers working on cellular modems are based in Munich, Germany. Apple also operates former Dialog Semiconductor Plc facilities that work on power-management chips in Livorno, Italy, Nabern and Neuaubing, Germany, and Swindon, U.K.Apple has several hundred research and development engineers for future processors and underlying technologies in Israel, which is only letting citizens leave their homes for essential reasons, like buying food and medicine.Read more: Israel’s Netanyahu Orders Near Total LockdownIn the U.S., Apple has suppliers such as Corning Inc. for glass, and Qorvo Inc., Skyworks Solutions Inc. and Broadcom Inc. for wireless chips. Broadcom Chief Executive Officer Hock Tan said recently that the virus “is going to have an impact on our semiconductor business, in particular in the second half of the fiscal year.”Chips take months to make and test, and companies build up months of inventory. That means Apple and other device makers may not have seen the worst of the disruptions yet.The virus is likely challenging Apple’s ability to design and test early versions of future products in Silicon Valley, which is grappling with a shelter-in-place mandate. The company has instated a remote work order, save for some mission-critical employees, for all its offices outside of China.San Francisco’s Shelter-in-Place Order Shows U.S. What’s to ComeThese struggles have yet to severely derail the 5G iPhone launch in the fall. During China’s factory shutdown in February, Apple was able to build a limited number of test versions of the new models, one of the people familiar with the company’s supply chain said.Apple finalizes the majority of design features for new iPhones between November and December of the year prior to launch, the people said. It begins mass-producing new casings around April and then starts a late manufacturing stage called Final Assembly, Test and Pack in about May.Should Apple be unable to send full teams of engineers to China factories to finalize designs and resolve issues, this typical timeline could still slip, another person familiar with the company’s supply chain said.(Updates with Jabil comments in 12th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Samsung flags chip recovery, shrinking phone market amid coronavirus outbreak

    Samsung flags chip recovery, shrinking phone market amid coronavirus outbreak

    Samsung Electronics Co Ltd said on Wednesday the coronavirus pandemic would hurt sales of smartphones and consumer electronics this year, while demand from data centres would fuel a recovery in memory chip markets. Chief Executive Kim Ki-nam said the coronavirus and U.S.-China trade disputes were casting a shadow over the outlook for the South Korean tech giant, whose Galaxy smartphones vie with Apple's iPhones for global dominance. While the smartphone market would shrink, Kim said the chip market - which makes up about half of Samsung's operating profit - would see demand growth after a slump last year exacerbated by excess supply and U.S.-China trade tensions.

  • Bloomberg

    Samsung Urges all Employees to Work From Home ‘Where Possible’

    (Bloomberg) -- Samsung Electronics Co. “strongly advised” its employees to work from home in a memo on Monday, escalating its response to the coronavirus pandemic.The document, reviewed by Bloomberg News, sets out the company’s wide-ranging efforts to curb the spread of the virus while minimizing business disruption. Entrance to its facilities is now subject to a health screening, international travel has been restricted to only “mission-critical journeys” and there are Samsung task forces around the globe to track and implement the latest expert advice. The company has even sent care packages to some who are working from home or undergoing self-quarantine.The memo was confirmed by a Samsung representative.Samsung has had to suspend production at its Gumi factory in South Korea on three successive weekends due to discoveries of Covid-19 infections. The advice from the company is to work from home “where possible,” so it’s unlikely to be taken up by most workers involved in its manufacturing operations. Still, the company employs more than 300,000 people globally across 52 sales offices, 15 regional offices and dozens of research, design and development centers.The world’s largest maker of smartphones, displays and memory chips is stepping up control measures after infections rose in its home country of South Korea. Apple Inc. suppliers LG Display Co. and LG Innotek Co. briefly halted their production lines earlier this month after they reported infections. SK Hynix Inc. found the first Covid-19 case in its Icheon chip-manufacturing complex on Friday, though that had no impact on production, according to a spokesperson.Elsewhere in the tech industry, Apple, Alphabet Inc.’s Google, Microsoft Corp. and Facebook Inc. have all canceled plans for developer conferences that were set to take place in the coming months. Twitter Inc. has made working from home mandatory for those able to keep going remotely. It will also keep paying hourly-wage workers through the period of disruption caused by the coronavirus outbreak, in a move that’s been echoed across Silicon Valley.To contact the reporter on this story: Sohee Kim in Seoul at skim847@bloomberg.netTo contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Vlad SavovFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.