Some CE Companies Suspend Operations in Russia, Some Don’t
The Russian invasion of Ukraine presents a difficult problem for many CE companies as the Russian market for CE products is big enough that companies don’t want to burn bridges but are under pressure both from the US government and from consumers to suspend or end operations in the country. Most recently Samsung Electronics has announced it will suspend shipments to Russia but has not indicated whether it will close its stores and Apple (AAPL) has stopped all product sales to Russia, closed its stores, and limited Apple services, however Xiaomi (1810.HK) and a number of other Chinese CE firms have yet to make a decision as to whether to continue to serve Russian customers. Dell (DELL), HP (HPE), Google (GOOG), Apple (AAPL), Intel (INTC), AMD (AMD), Oracle (ORCL), SAP (SAP.GR), Amazon (AMZN), Meta (FB), Netflix (NFLX), Roku (ROKU), Taiwan Semi (TSM) and Microsoft (MSFT) have all suspended operations or shipments to Russia and we expect many others to join the list this week.
While the Russian smartphone market is relatively small at ~31m units, with Samsung (#1 share) and Apple (#3 share) out of the way, Xiaomi could move into 1st place if they remain. That said, is it worth the risk of being sanctioned by the US given they use parts made in the US or by US equipment. Probably not but most Chinese companies do not seem to be rushing to make such decisions quickly and those that are already on US trade restrictions lists, such as Huawei (pvt), ZTE (000063.CH), and SMIC (688981.CH), will likely keep their Russian relationships intact.
The list of US and foreign CE companies that have suspended Russian operations continues to grow but there are many that are slow to take action and seem more concerned as to how any operational changes in Russia would affect their bottom line. Japanese glass supplier Asahi (5201.JP) made the following statement: “AGC Inc. hereby expresses that we are deeply concerned about the situation in Ukraine and hope for peace to be restored as quickly as possible. The impact of the situation on AGC Group and status of its business operations in Europe and Russia are as follows. We will continue to monitor the situation closely and take appropriate actions.” This all seems to be a ‘if things start to affect our business, we will let you know”, rather than a condemnation of Russia’s overt acts, surprising from a company whose glass appears in many CE devices shipped to the US, risking social backlash or violations of US trade policy. That said, there are still many US and foreign CE companies that have yet to make a statement as to their stance on Russian relations, but the continuation of hostilities over the weekend will likely push many CE companies to limit, suspend, or end their relationships in Russia.
While the Russian smartphone market is relatively small at ~31m units, with Samsung (#1 share) and Apple (#3 share) out of the way, Xiaomi could move into 1st place if they remain. That said, is it worth the risk of being sanctioned by the US given they use parts made in the US or by US equipment. Probably not but most Chinese companies do not seem to be rushing to make such decisions quickly and those that are already on US trade restrictions lists, such as Huawei (pvt), ZTE (000063.CH), and SMIC (688981.CH), will likely keep their Russian relationships intact.
The list of US and foreign CE companies that have suspended Russian operations continues to grow but there are many that are slow to take action and seem more concerned as to how any operational changes in Russia would affect their bottom line. Japanese glass supplier Asahi (5201.JP) made the following statement: “AGC Inc. hereby expresses that we are deeply concerned about the situation in Ukraine and hope for peace to be restored as quickly as possible. The impact of the situation on AGC Group and status of its business operations in Europe and Russia are as follows. We will continue to monitor the situation closely and take appropriate actions.” This all seems to be a ‘if things start to affect our business, we will let you know”, rather than a condemnation of Russia’s overt acts, surprising from a company whose glass appears in many CE devices shipped to the US, risking social backlash or violations of US trade policy. That said, there are still many US and foreign CE companies that have yet to make a statement as to their stance on Russian relations, but the continuation of hostilities over the weekend will likely push many CE companies to limit, suspend, or end their relationships in Russia.
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