Samsung expects sharp drop in mobile demand in Q2 2020

Seoul: Samsung Electronics on Wednesday said mobile demand is expected to drop sharply in most regions due to an economic downturn caused by COVID-19 in the second quarter.

The overall market demand fell significantly quarter-on-quarter and the company’s smartphone shipments also declined in the first quarter.

The Samsung IT and Mobile Communications Division posted KRW 26 trillion (nearly $21.6 billion) in consolidated revenue and KRW 2.65 trillion ($2.1 billion) in operating profit for the first quarter of 2020.

“However, the company maintained sound profitability by improving the product mix, increasing the sales portion of 5G models and using marketing expenses efficiently during the period,” the south Korean giant said in a statement.

In particular, the average selling price (ASP) of flagship smartphones increased compared to last year on the back of higher-than-expected share of Galaxy S20 Ultra sales as well as solid sales of the Galaxy Z Flip.

The company expects a decline in product sales and its overall business performance as the market shrinks and effects of store closures continue to have direct impacts.

Amid the market uncertainty, Samsung said it will focus on improving cost efficiency and strengthening its online and B2B channels.

“In case of any additional disruptions at production facilities, the Company will respond by flexibly utilizing its diversified manufacturing capabilities across the globe,” it added.

For the second half, amid uncertainties including the possibility of a prolonged pandemic, market competition is forecast to intensify as manufacturers strive to recover from the weakness in the first half.

Samsung said it will continue to offer differentiated products in the premium segment with the launch of new foldable and Note models.

It also plans to enhance product competitiveness by expanding 5G adoption to mass-market smartphones and improve operational efficiency across all areas throughout R&D, production, supply, channel and marketing.

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