US media: Samsung seems to be wise to reduce China's production capacity, but in fact ...

Recently, the Wall Street Journal article pointed out that Samsung Electronics has been committed to shifting China's production capacity for many years to diversify its smart phone supply chain. Although this strategy seems wise, as the new coronavirus constitutes a global pandemic, is diversified development still sought by the market?

The report pointed out that earlier this year, when a new coronavirus raged in China and the global supply chain was in trouble, Samsung Electronics executives might bet from their many years of bet-shifting smartphone production from China to Vietnam and Vietnam. India's strategy was comforted.

However, with the large-scale epidemic of new coronaviruses worldwide, this strategic value has been affected by the epidemic, which has forced the market to re-evaluate the extent to which "diversification" can protect enterprises and markets from such a wide range of threats.

At present, the new coronavirus has put tremendous pressure on Samsung's diverse supply chain.

Specifically, it can be divided into two aspects. One is that market concerns about the epidemic are weakening the demand for new listed devices, including Samsung's new Galaxy series phones. The other is that China's supply chain has just begun to lift the blockade and isolation, and outside China These restrictions may still hinder the use of key components.

Therefore, at Samsung ’s annual shareholder meeting held last Wednesday, Gao Dongzhen, president and CEO of Samsung ’s IT and mobile communications division, admitted that the epidemic is forcing Samsung to cut its demand forecast for mobile phones.

Gao Dongzhen said: "Initially, the demand for smartphones was expected to increase. However, the outbreak of new crown pneumonia and the duration of the impact may exceed expectations, causing the smartphone market to shrink." The report states that this shrinking will continue for several months, or even all year.

Samsung, on the other hand, has relocated factories out of China, but its factories in Vietnam and India still rely on Chinese-made components. It is reported that due to the urgent demand for some parts, Samsung last month proposed to provide overseas suppliers with up to $ 2.1 billion in loans and cash payments.

In addition to mobile phones and chips mainly produced in Asia, other Samsung Group businesses may also be affected by the outbreak. The company has television and battery manufacturing operations in Europe, and foundries and other manufacturing facilities in the United States, including a washing machine plant in South Carolina.