According to employees, Samsung Electronics Co. Ltd. has reduced output at its sizable smartphone plant in Vietnam as merchants and warehouses struggle with growing inventories due to a global decline in consumer spending.
The largest warehouse market in the country is already at capacity, and major American retailers like Best Buy (BBY.N) and Target Corp (TGT.N) issue warnings about sluggish sales as consumers tighten their budgets following early COVID-era purchasing binges. View More
According to the Vietnamese government, the impact is particularly felt in the northern province of Thai Nguyen, one of Samsung’s (005930.KS) two mobile manufacturing facilities in Vietnam, where the largest smartphone vendor in the world produces half of its phone output.
Due to restocking and weaker consumer spending, US company inventories are rising.
According to its website, Samsung, which distributed about 270 million smartphones in 2021, claims the campus has the potential to produce about 100 million handsets annually.
According to Samsung, the company has not talked about lowering its annual production target in Vietnam.
In its results call last week, the South Korean tech giant expressed cautious optimism about the market for smartphones in the second half, noting that supply disruptions had been essentially fixed and that demand would either remain flat or even experience single-digit increase.
In the second half, it hopes that sales of foldable phones will surpass those of the Galaxy Note, its previous flagship model. On August 10, it’s anticipated to reveal its most recent foldables.
Since they have been employed by Samsung for about five years, Thuong and her friends claim to have never experienced such severe production cuts. Due to reduced consumer spending and a significant reduction in sales in China, research firm Gartner predicts a 6% decline in worldwide smartphone shipments this year.
With six facilities spread out across the nation, from the factory in Ho Chi Minh City that produce refrigerators and washing machines to the factories in Thai Nguyen and Bac Ninh in the north, Samsung is Vietnam’s largest foreign investment and exporter.
Vietnam’s economic growth has been fueled by the $18 billion investment from the South Korean firm. Only Samsung contributes one fifth of all exports from Vietnam.
When it first arrived in Thai Nguyen, around 65 kilometres (40 miles) from the capital Hanoi, about ten years ago, the area was a sleepy farming region. Now, it is a booming industrial powerhouse that also produces phones for Chinese names like Xiaomi Corp. (1810.HK).
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