'Samsung Electronics Also Breached' Electronics Industry Faces Early COVID-19 Emergency

[Asia Economy Reporter Changhwan Lee] The novel coronavirus infection (COVID-19) has reached as far as Samsung Electronics factories, putting the electronics industry on high alert. Comprehensive damage is feared, including both exports and domestic demand.

According to related industries on the 23rd, a Samsung Electronics employee at the Gumi plant was confirmed positive for COVID-19 the previous day, leading to a temporary closure of the smartphone production facility. After thorough disinfection over the weekend, the plant is scheduled to resume normal operations from the afternoon of the 24th, but some impact due to the suspension of operations appears inevitable.

Samsung Electronics confirmed the COVID-19 case of a 28-year-old employee at the Gumi plant on the morning of the same day and immediately coordinated with the Korea Disease Control and Prevention Agency to quarantine and test colleagues who had contact with the confirmed case. The company sent all employees at the plant home early and temporarily closed the Gumi plant. The Gumi plant will remain closed until the morning of the 24th, and the floor where the confirmed employee worked will be closed until the morning of the 25th for thorough disinfection.

Additionally, the company plans to identify the movements of colleagues who had contact with the confirmed case and take further quarantine and testing measures as necessary.

The Gumi plant belongs to Samsung Electronics' second plant producing foldable smartphones, including the recently released 'Galaxy Z Flip.' The confirmed case is known to be part of the wireless business division. Concerns have been raised that the temporary closure of the plant will disrupt product production and supply. However, the company expects minimal damage since the incident occurred over the weekend.

The Gumi city government announced on the same day, "A COVID-19 confirmed case has occurred," adding, "The confirmed case is a 28-year-old woman residing in Sandong-myeon and an employee of a major corporation's wireless business division in the Gumi National Industrial Complex." Gumi Mayor Jaeng Seyong also posted on social media, stating, "The confirmed case was found to have met her boyfriend who attended Shincheonji Church gatherings on the 9th and 16th. She is currently in isolation at home."

SK Hynix also quarantined about 800 employees at its Icheon campus on the 20th after it was revealed that a new employee had contact with a confirmed case in Daegu. Earlier, on the 19th, about 280 trainees who were receiving training together with the new employee at the SKHU training center on the Icheon campus were sent home, and the training center was closed.

SK Hynix explained that there are about 18,000 employees working at the Icheon campus, and factory operations have not been affected.

LG Electronics has advised all employees to refrain from business trips between workplaces. In particular, trips to the Daegu and Gyeongbuk regions are being postponed or replaced with video conferences. Furthermore, the company is reportedly allowing employees who have visited these regions to work from home.

LG Group affiliates operating factories in Gumi, including LG Electronics, LG Display, and LG Innotek, have also decided to prohibit entry to workplaces in principle for residents of Daegu and Cheongdo regions and those who have visited these areas. Among Gumi factory employees commuting from Daegu, if they have visited the same locations as confirmed cases in Daegu, office workers will be allowed to work from home, and production workers will be granted paid leave as a form of official leave.

The COVID-19 crisis is expected to cause damage across the industry. According to the Korea Customs Service, as of January, China accounted for 53% of memory semiconductor exports.

Looking at the sales ratio in China of major semiconductor companies (as of Q3 2019), Samsung Electronics accounts for 16%, and SK Hynix about 49%.

The Korea Eximbank Overseas Economic Research Institute recently explained in a report, "China is the world's largest market and production base for mobile phones," expressing concerns about a slowdown in semiconductor demand for smartphones. It forecasts that global smartphone demand will decrease by about 10% year-on-year due to the contraction of the Chinese market, and production will also decline due to reduced operating days at Chinese factories responsible for 70% of mobile phone production.