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Exclusive – Samsung workers in Vietnam bear the brunt of slowing global electronics demand


America’s largest warehouse market is full and major US retailers such as Best Buy and Target Corp are warning of slowing sales as shoppers tighten their belts after the overspending of the early COVID era.

The effect is particularly felt in Thai Nguyen province in northern Vietnam, one of two Samsung mobile phone manufacturing bases in the country, where the world’s largest smartphone seller makes half of its production. telephones, according to the Vietnamese government.

Chart: US business inventories rise on inventory restocking and slowing consumer spending.

Samsung, which shipped around 270 million smartphones in 2021, says the campus has the capacity to manufacture around 100 million devices per year, according to its website.

“We are only going to work three days a week, some lines are adjusting to a four-day work week instead of the previous six, and of course no overtime is needed,” worker Pham Thi Thuong told Reuters. of 28 years the factory.

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

Reuters could not immediately establish whether Samsung is moving production to other manufacturing bases to compensate for reduced production at the Vietnamese factory. The company also manufactures telephones in South Korea and India.

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

The South Korean tech giant is relatively optimistic about smartphone demand in the second half of the year, saying on its earnings conference call last week that supply disruptions had been largely resolved and that the demand would remain stable or even experience single-digit growth.

It expects foldable phone sales to overtake those of its latest flagship smartphone, the Galaxy Note, in the second half of the year. It is expected to unveil its latest foldable phones on August 10.

But a dozen workers outside the factory interviewed by Reuters nearly all said business was not good.

Thuong and his friends who have worked for Samsung for around five years said they had never seen greater production cuts.

“Of course, there is a low season every year, often around June-July, but low means no OT (overtime), no reductions in working days like this,” Thuong said.

She added that managers had told workers that stocks were high and there were not many new orders.

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

SAMSUNG TOWN

Samsung is Vietnam’s largest foreign investor and largest exporter, with six factories across the country, industrial hubs in northern Thai Nguyen and Bac Ninh where most phones and parts are made, the factory in Ho Chi Minh City that manufactures refrigerators and washing machines.

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

Its arrival nearly a decade ago in Thai Nguyen, about 65 km (40 miles) from the capital Hanoi, transformed the area from a sleepy agricultural district into a sprawling industrial hub that now also manufactures phones for Chinese brands, including Xiaomi Corp.

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

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

Job cuts are on the minds of some workers, but so far none have been announced.

“I don’t think there will be any job cuts, just some reductions in working hours to adapt to the current global situation,” said one worker, declining to be named as she did not want to risk it. his role as team leader.

“I hope that the current reduction will not last long and that we will soon return to a normal rhythm.”



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