Apple suppliers LG and Hynix report the first effects of the global Covid-19 slump

Apple suppliers LG Dispaly and SK Hynix have revealed the financial effects of the slump in demand for tech products amid the global Covid-19 crisis.

LG Display warned of a sharp contraction in demand for TVs and smartphones as a result of the new coronavirus outbreak in the current quarter, after widening its first-quarter losses.

The South Korean panel maker posted its fifth straight quarter of operating losses, as the coronavirus pandemic added to the problems of the industry already grappling with demand falls and a supply glut.

LG Display posted an operating loss of 362 billion won (€270.5m), nearly triple the operating loss of 132 billion won a year earlier. Revenue fell 20% to 4.7 trillion won.

LG Display said an increase in working from home and online activities meant demand for products such as monitors, laptops and tablets would increase in the second quarter, but it might not be enough to offset weak demand for TVs and smartphones.

“We expect volatility in demand to increase down the road,” LG Display said. “It’s likely that LG Display will continue to have another quarterly loss, reflecting the impact of the coronavirus on North America and Europe, which now have become its epicentre,” Park Kang-ho, an analyst at Daishin Securities, said.

The flat-screen maker also said it delayed production at its new Chinese factory for its advanced organic light-emitting diode (OLED) display to the second quarter.

Hynix, the South Korean chipmaker, which counts Apple among its customers, posted a 41% drop in quarterly profit, but beat estimates by a large margin as server demand due to the coronavirus-driven shift to working from home partly offset weak smartphone business.

Apple plans to sell Mac computers with its own main processors by next year based on the chip designs currently used in its iPhones and iPads.

The iPhone maker is working on three Mac processors based on the A14 processor in its next iPhone.

- Reuters