The COVID-19 pandemic has apparently not slowed down Samsung’s growth by a large amount, with their current estimates even beating initial expectations. Samsung posted its earnings guidance for Q1 2020, being one of the first tech companies to do so, estimating approximately 55 trillion Korean won ($45.26 billion) in sales and 6.4 trillion Korean won ($5.26 billion) in operating profit.
Compared to Q1 2019, Samsung is expecting an operating profit YoY growth of 2.7% and an approximate 5% YoY growth in its first-quarter consolidated sales. This comes during a time when many tech companies are expecting the industry to slowdown by a significant amount as the virus outbreak wrecks havoc, disrupting supply chains and impacting sales.
Samsung’s growth in earning can be explained by relatively weak Korean won, cost-saving efforts and strong demand for memory chips. The demand for memory chips arose when the virus outbreak forced people into quarantine and work from home, leading to data centres requiring more memory chips. A major part of Samsung’s earnings comes from its memory components used in smartphones and data centers.
Regarding the semi-conductor markets, researchers noted that there has not been any order cuts from customers too. This points to a positive year-on-year growth estimation for the month of April and subsequently Q2 2020.
Samsung’s smartphone division remained largely unaffected as most of its operations takes place in Vietnam, India and South Korea. However, India’s recent 21-day lockdown will likely affect some parts of its supply chain and restrictions in other countries may affect demand in the later quarters of 2020 too.