Coronavirus continues to make global headlines and hamper a number of companies with business operations in China. But how does the deadly epidemic impact the world's leading tech giants – Apple and Samsung?
The arguments between iOS and Android lovers can go on forever. While both camps seem to be busy proving which system is better, there might be a bigger problem looming on the horizon: Coronavirus.
With so many headlines covering the latest disease outbreak, the fatal epidemic is really getting out of hands. It has already taken the lives of over 2,360 people and infected more than 78,000.
As the world struggles to contain the public health crisis, businesses are starting to take a hit. Tech giants Apple (NASDAQ:AAPL) and Samsung are no exception.
Apple warned investors that it no longer expects to meet the second fiscal quarter revenue guidance of $63 billion to $67 billion.
When setting this ridiculously wide range of estimates only a few weeks ago, Apple hoped that it would already account for the potential impacts of the disease.
Apple has always been one of the world’s most profitable firms, so it’s highly unusual for this Silicon Valley favorite to say it will miss sales expectations.
What’s even more disturbing is that in its latest report, the company didn’t drop a word on the updated revenue predictions or how much of the miss is due to supply constraints versus a drop in demand.
If coronavirus continues to weigh on Apple’s supply chain, the delay of the smartphone could be a harbinger for the 5G model later this year.
Brian White, an analyst at Monness, Crespi, Hardt, said in an investor note:
The impact of the constrained manufacturing environment in China on the production of the new iPhones expected to launch in September remains unclear at this point, but supply constraints are possible.
Since the company’s key rival Samsung has already presented a full line of 5G-enabled smartphones, a delay in the 5G iPhone’s release would be a massive blow to Apple.
After Samsung shut down all of its smartphone factories in China, many were confident the company wouldn’t be affected much by China’s epidemic. Little did they know.
On Saturday, Samsung Electronics reported that one coronavirus case had been confirmed at its factory in Gumi. The entire facility is now shut until Monday morning. The floor where the infected employee worked will remain closed until Feb. 25.
The company was quick to reassure that production at its chip and display factories in other parts of the country would not be affected, adding that most of its smartphones are manufactured in Vietnam and India.
On Friday, Vietnam’s Ministry of Industry and Trade said the country’s supply chain is also suffering from the epidemic’s impact.
In an emailed statement, they wrote:
Car, electronics and phone manufacturers are experiencing difficulty in acquiring supplies and materials due to disruptions from the virus.
This means the virus could stall production of the two latest Samsung smartphones since most of the components still come from China.
The ministry added:
Samsung is considering using sea or air transport to import needed components, but it would lift up the cost and would hardly meet the production schedule and demand.
Well, to be frank, Apple is doing a little bit worse now. The company was the one to shut down all of its stores and offices in China earlier this month. It also became one of the first U.S. companies to acknowledge the disruptive impact of the virus on its business operations.
Samsung may technically be one step ahead of its contender. However, it still looks like the company’s bad days are yet to come.
With the disease spreading all over South Korea at a rapid pace, Samsung’s future is anything but safe.
The problem with any epidemic is that it is unpredictable. The only thing that is clear is neither company will escape the coronavirus aftermath unscathed.
Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.
This article was edited by Sam Bourgi.
Last modified: February 23, 2020 5:54 PM UTC