Exclusive: Samsung workers in Vietnam bear the brunt of the slowdown in global electronics demand

TAY NGUYEN, Vietnam, Aug 4 (Reuters) – Samsung Electronics has cut production at its massive smartphone factory in Vietnam, as retailers and warehouses grapple with rising inventories amid a global slump in consumer spending, employees said.

America’s largest pantry market is full, and major US retailers such as Best Buy (BBY.N) and Target Corp (TGT.N) are warning of slowing sales as shoppers tighten their belts after early bouts of spending in the era of COVID. Read more

The impact was evident in northern Vietnam’s Thai Nguyen province, one of Samsung’s (005930.KS) mobile phone manufacturing bases in the country where the world’s largest smartphone vendor produces half of its phone production, according to the Vietnamese government.

Register now to get free unlimited access to Reuters.com

US business inventories rise due to restocking, slowing consumer spending

Samsung, which shipped about 270 million smartphones in 2021, says the campus has the capacity to produce about 100 million devices annually, according to its website.

“We will only work three days a week, some lines are adapting to a four-day working week instead of the six before that, and of course there is no need for extra working hours,” Pham Thi Thong, a 28-year-old factory worker told Reuters. .

“Business activities were more robust during this time last year when the COVID-19 outbreak was at its peak. It’s very lukewarm now.”

Reuters was not immediately able to determine whether Samsung is shifting production to other manufacturing bases to offset lower production from the Vietnamese plant. The company also makes phones in South Korea and India.

Samsung told Reuters it had not discussed cutting its annual production target in Vietnam.

The South Korean tech giant is relatively upbeat about smartphone demand in the second half, saying on its earnings call last week that most supply disruptions have been resolved and that demand will either remain flat or even experience single-digit growth. Read more

Sales of foldable phones aim to outpace sales of its previous flagship smartphone, the Galaxy Note, in the second half. It is expected to unveil the latest foldable devices on August 10.

But outside the factory, dozens of workers interviewed by Reuters almost all said the work was not good.

Employees make their way to work at a Samsung factory in Tay Nguyen province north of Hanoi, Vietnam on October 13, 2016. REUTERS/RAW

Thuong and her friends, who have been with Samsung for about five years, said they have never seen deeper production cuts.

“Of course there is a low season every year, often between June and July, but low means no overtime (extra time), not a break in working days like that,” Thong said.

She said managers told workers that workers’ stocks were high and there weren’t many new orders.

Research firm Gartner expects global smartphone shipments to fall 6% this year due to consumer spending cuts and a sharp drop in sales in China.

Samsung Town

Samsung is the largest foreign investor and exporter in Vietnam, with six factories across the country, from the northern industrial hubs of Thai Nguyen and Bac Ninh where most phones and spare parts are manufactured, to the Ho Chi Minh City factory that makes refrigerators and washing machines.

The South Korean company pumped $18 billion into Vietnam, boosting the country’s economic growth. Samsung alone contributes a fifth of Vietnam’s total exports.

Its arrival nearly a decade ago in Tay Nguyen, about 65 kilometers (40 miles) from the capital Hanoi, has transformed the area from a quiet agricultural area into a sprawling industrial hub that now also manufactures phones for Chinese brands including Xiaomi Corp (1810.HK). ).

Generous benefits, including subsidized or free meals and accommodation, have drawn tens of thousands of young workers to the area, but reduced working hours have left many feeling stale.

“My salary was cut in half last month because I only worked four days and spent the remaining week doing nothing,” said worker Nguyen Thi Tuy.

Job cuts are still on the minds of some workers but so far no job cuts have been announced.

“I don’t think there will be job cuts, just some working hours to match the current global situation,” said one of the workers, who declined to be named because she did not want to risk her role as a team leader.

“I hope the current cut will not last long and we will soon return to its normal pace.”

Register now to get free unlimited access to Reuters.com

Additional reporting by Khanh Fu in Hanoi and Joyce Lee in Seoul; Editing by Myung Kim and Stephen Coates

Our Standards: Thomson Reuters Trust Principles.

Leave a Comment