Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
Coronavirus boosts 'contactless' economy, benefits Samsung's memory chip biz
Samsung Electronics' semiconductor plant in Pyeongtaek, Gyeonggi Province. Courtesy of Samsung Electronics
By Baek Byung-yeul
By Baek Byung-yeul
While the stock market in Korea has been experiencing a sharp drop due to the spread of COVID-19, Samsung Electronics appears to be benefiting from the rise in the number of people looking to reduce face-to-face interaction, industry analysts said.
As part of the government's effort to contain the spread of the virus, people are advised to try “social distancing.” Companies and public organizations are also implementing various measures such as adopting remote working systems to prevent the virus spread.
With more organizations seeking ways to operate more efficiently, analysts presume such efforts will accelerate digital transformation, forcing more companies and government agencies to adopt cloud computing systems.
They said it is inevitable that Samsung will suffer a temporary global demand shock until the second quarter of 2020 given China's smartphone sales halved from 14 million units in February 2019 to 6.34 million units, last month.
However, the increasing need for cloud computing will promote demand for memory chips for data centers, and Samsung, the world's largest memory chip maker, will be greatly affected by the rush.
“There has been warnings that the non-face-to-face working system is not effective, but the world is now in a unique situation forcing people to get used to the system. People do their video conferencing via Zoom or Skype and share data via cloud platforms,” Kim Young-woo, an SK Securities analyst, said. “From this time forward, business practices, entertainment and public services will be fundamentally changed.”
“Because of COVID-19, the demand for video conferencing, working from home and home entertainment will expand and the need for investment in cloud computing systems will also be increased. Eventually, IT firms such as Amazon, Microsoft, Google, Tencent and Alibaba will have no choice but to try to source more servers,” the analyst added.
Date shows use of remote working systems is spiking due to the virus outbreak. According to Rsupport, a local remote support software company, the usage statistics of its cloud computing-based virtual meeting service on Feb. 26 was increased by 1275.6 percent from Jan. 22.
Despite being hit by the deadly virus, Samsung has been carrying out its facility expansion plan for NAND flash memory chips without a problem.
The world's largest memory chip maker recently started mass-producing fifth-generation V-NAND chips at its new production line in Xian, China. It said the beginning of the manufacturing activity is to fully accommodate demand for storage chips.
Samsung added it also plans to shift its V-NAND chip production line in Pyeongtaek, Gyeonggi Province, from fifth-generation V-NAND to sixth-generation V-NAND to “better address the growing demand.”
The spread of coronavirus is also expected to force the government to rush to cloud computing.
“Currently, Korea has about one percent share in the global cloud computing market, which is very low volume. It is because the government is hesitant to adopt the digital transformation,” an industry official working at a cloud company here said.
“However, taking the virus outbreak as a turning point, the government is expected to accelerate its digital transformation effort because we all have experienced how important cloud computing has become for many organizations at this time,” he added.