'Virus to have limited impact on Z Flip, Fold output,' Samsung says
People wears masks in front a Samsung Store at a main shopping area as the country is hit by an outbreak of the new coronavirus in downtown Shanghai, China, Feb. 21. Reuters-Yonhap
By Kim Yoo-chul
By Kim Yoo-chul
Samsung Electronics said Sunday its decision to “temporarily close” its mobile phone plant in Gumi, North Gyeongsang Province where it produces premium smartphones, including the Galaxy Fold and Galaxy Z Flip, will have a limited impact on output.
“We don't think the temporary shutdown of our Gumi plant will have a wide impact ... because the situation is properly under control,” an official said.
In a press release, the company said that one of its employees at the plant who came into contact with an infected person placed themselves in quarantine, adding that it was having other workers tested for possible COVID-19 (2019-nCoV) infection.
The Gumi factory will reopen Feb. 24 afternoon after being closed for disinfectant procedures for two days. Access to the floor where the infected employee worked will be denied until Feb. 25.
However, because production volume at the plant is “small” the effects of the “Gumi situation” will be short-lived, according the official and sources familiar with the situation. The technology heavyweight has moved the majority of its output to Vietnam over the last couple of years.
Samsung said it will not increase the price of its two new premium smartphones, rather it will control inventory, as customers are unlikely to purchase the higher-priced phones at the moment because of the coronavirus.
The company may also consider delaying the output of the Fold and Flip models as its Vietnamese plants may suffer from supply chain issues caused by the spread of the virus. Vietnam is heavily reliant on China for necessary materials and equipment for the production of the two premium phones.
Samsung plans to move forward with planned promotional events for the flagship handsets as scheduled, but will switch to online channels rather than offline events.
The company was the largest smartphone vendor in terms of shipments last year, exporting 295 million, followed by China's Huawei with 241 million, and Apple at 193 million, according to an analysis by market research firm IHS Markit.
Annual smartphone production is expected to be hit hard worldwide as the virus spreads. China, the world's largest smartphone market, is now choked off from suppliers, workers and logistics networks. TrendForce, another market research firm, said that production of smartphones is expected to have decreased by 12 percent in the first quarter of 2020, year-on-year. Demand also contracted because of COVID-19, and is not expected to recover until later in the year, it added