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Samsung Production Slowdown Due to Cut in Demand Affects Workers in Vietnam

Samsung Electronics Ltd has scaled again manufacturing at its large smartphone plant in Vietnam, staff say, as retailers and warehouses grapple with rising stock amid a worldwide fall in client spending.

America’s largest warehouse market is full and main US retailers akin to Best Buy and Target Corp warn of slowing gross sales as consumers tighten their belts after early COVID-era spending binges.

The impact is acutely felt in Vietnam’s northern province of Thai Nguyen, considered one of Samsung’s two cell manufacturing bases in the nation the place the world’s largest smartphone vendor churns out half of its telephone output, in accordance to the Vietnam authorities.

Samsung, which shipped round 270 million smartphones in 2021, says the campus has the capability to make round 100 million units a 12 months, in accordance to its web site.

“We are going to work just three days per week, some lines are adjusting to a four-day workweek instead of six before, and of course no overtime is needed,” Pham Thi Thuong, a 28-year-old employee on the plant advised Reuters.

Reuters couldn’t instantly set up whether or not Samsung is shifting manufacturing to different manufacturing bases to make up for decreased output from the Vietnamese manufacturing unit. The firm additionally makes telephones in South Korea and India.

Samsung advised Reuters it has not mentioned lowering its annual manufacturing goal in Vietnam.

The South Korean tech large is comparatively optimistic about smartphone demand in the second half, saying on its earnings name final week that provide disruptions had principally been resolved and that demand would both keep flat and even see single-digit development.

It is aiming for foldable telephone gross sales to surpass that of its previous flagship smartphone, the Galaxy Note, in the second half. It is anticipated to unveil its newest foldables on August 10.

But a dozen staff interviewed by Reuters outdoors the manufacturing unit nearly all stated enterprise will not be good.

Thuong and her buddies who’ve been working for Samsung for round 5 years stated that they had by no means seen deeper manufacturing cuts.

She stated managers had advised staff inventories had been excessive and there weren’t many new orders.

Research agency Gartner expects international smartphone shipments to decline by 6 % this 12 months due to client spending cuts and a pointy gross sales drop in China.

Samsung is Vietnam’s largest international investor and exporter, with six factories throughout the nation, from northern industrial hubs Thai Nguyen and Bac Ninh the place most telephones and elements are manufactured, to Ho Chi Minh City’s plant making fridges and washing machines.

The South Korean firm has poured $18 billion (roughly Rs. 1,43,190 crore) into Vietnam, powering the nation’s financial development. Samsung alone contributes one fifth of Vietnam’s complete exports.

Its arrival practically a decade in the past in Thai Nguyen, about 65km (40 miles) from the capital Hanoi, remodeled the world from a sleepy farming district right into a sprawling industrial hub that now additionally manufactures telephones for Chinese manufacturers together with Xiaomi Corp.

Generous advantages together with subsidised or free meals and lodging have lured tens of 1000’s of younger staff to the area, however decreased workhours have now left many feeling the pinch.

“My salary was cut by half last month because I just worked four days and spent the remaining week doing nothing,” stated employee Nguyen Thi Tuoi.

Job cuts are on some staff’ minds however to date none have been introduced.

“I don’t think there will be job cuts, just some working hour cuts to suit the current global situation,” stated one employee, declining to be named as a result of she didn’t need to danger her staff chief function.

“I do hope that the current cut will not last long and we will soon be back to normal pace.”

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