Reuters: Samsung Vietnam workers face a wave of decline in global demand for electronic goods

Samsung Electronics is cutting smartphone production in Vietnam as retailers grapple with high inventories while global consumer demand declines.

Warehouses in the US are operating at full capacity. Many of the country’s major retailers, such as Best Buy and Target Corp., have recently repeatedly warned that consumers are starting to “tighten their belts” after a period of spending boom right after the Covid-19 pandemic. .

And the impact of this phenomenon can be partly felt in Thai Nguyen, where Samsung has two large production complexes, contributing about 50% of the global supply of this branded smartphone. Samsung said the factory complex in Thai Nguyen has a capacity of about 100 million smartphones per year.

Inventories of electronic products increased in the US. Photo: Refinitiv.

“We currently work only three days a week while many other lines have also adjusted the number of working days from 6 to 4 days. Of course, we also don’t need to work overtime,” Pham Thi Thuong, 28, a factory worker at Samsung Thai Nguyen, told Reuters.

“Manufacturing last year was much busier, even during the most severe period of the Covid-19 outbreak. The current situation is quite bleak,” she said.

Reuters could not yet conclude whether Samsung is moving production to other factories in the region. In addition to Vietnam, the company is also manufacturing smartphones in Korea and India.

Samsung told Reuters that the company has no intention of cutting smartphone production in Vietnam. The company is also optimistic about the outlook for global smartphone demand in the second half of this year.

They forecast its foldable phone sales will surpass the Galaxy Note lineup in the third and fourth quarters. The company’s latest folding phone product line is expected to launch on August 10.

However, most workers interviewed by Reuters outside the factory premises said that the current production situation does not bring many positive signals.

Thuong and some friends, who have worked at Samsung for five years, said they have never seen a period of production cuts as “deep” as the present.

“Of course, there will be a low season during the year, usually in June and July. But the low point here is when workers do not have to work overtime rather than cutting their working days like this.” , Thuong replied.

Her manager explained that the inventory was increasing while the company did not receive many new orders.

Research firm Gartner forecasts a 6% decline in global smartphone sales this year as consumers cut back on spending and sales in China plummet.

‘Samsung City’

Samsung is a foreign investor and the company with the largest export value in Vietnam with a total of 6 factories nationwide, stretching from industrial centers in the North such as Bac Ninh, Thai Nguyen to Ho Chi Minh City. Ho Chi Minh City in the South, where this business mainly manufactures refrigerators and washing machines.

Workers enter a shift at Samsung Thai Nguyen factory. Photo: Reuters.

This group poured about 18 billion USD into Vietnam, making a great contribution to Vietnam’s growth during the past time. Samsung alone accounts for 1/5 of the total export turnover of the whole economy.

Nearly 10 years ago, this company invested in the construction of Samsung Thai Nguyen complex, about 65 km north of Hanoi, contributing to turning the locality into one of the leading industrial centers in the North of Vietnam. Xiaomi Corp’s mobile phone factory is also located here.

Samsung’s attractive remuneration policy, such as providing free meals and accommodation, helps attract tens of thousands of young workers to this locality. But the recent move to cut production made many of them nervous.

“My income halved last month because I only worked four days a week,” said Nguyen Thi Tuoi, a worker at Samsung Thai Nguyen factory.

Many workers fear the company will conduct layoffs, but no official announcement has been made.

“I don’t think that will happen. The company is just adjusting the production plan to match the current world situation,” a production team leader shared.

“I hope the current situation will not last long,” she said.