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

Workers make their solution to work at a Samsung manufacturing facility in Tay Nguyen province north of Hanoi, Vietnam on October 13, 2016. REUTERS/RAW

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TAY NGUYEN, Vietnam, Aug 4 (Reuters) – Samsung Electronics has lower manufacturing at its huge smartphone manufacturing facility in Vietnam, as retailers and warehouses grapple with rising inventories amid a world hunch in client spending, workers mentioned.

America’s largest pantry market is full, and main US retailers comparable to Greatest Purchase (BBY.N) and Goal Corp (TGT.N) are warning of slowing gross sales as buyers tighten their belts after early bouts of spending within the period of COVID. Learn extra

The affect was evident in northern Vietnam’s Thai Nguyen province, one in every of Samsung’s (005930.KS) cell phone manufacturing bases within the nation the place the world’s largest smartphone vendor produces half of its cellphone manufacturing, in accordance with the Vietnamese authorities.

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US enterprise inventories rise as a result of restocking, slowing client spending

Samsung, which shipped about 270 million smartphones in 2021, says the campus has the capability to provide about 100 million gadgets yearly, in accordance with its web site.

“We’ll solely work three days every week, some strains are adapting to a four-day working week as a substitute of the six earlier than that, and naturally there isn’t any want for further working hours,” Pham Thi Thong, a 28-year-old manufacturing facility employee informed Reuters. .

“Enterprise actions had been extra strong throughout this time final 12 months when the COVID-19 outbreak was at its peak. It is very lukewarm now.”

Reuters was not instantly in a position to decide whether or not Samsung is shifting manufacturing to different manufacturing bases to offset decrease manufacturing from the Vietnamese plant. The corporate additionally makes telephones in South Korea and India.

Samsung informed Reuters it had not mentioned reducing its annual manufacturing goal in Vietnam.

The South Korean tech big is comparatively upbeat about smartphone demand within the second half, saying on its earnings name final week that the majority provide disruptions have been resolved and that demand will both stay flat and even expertise single-digit progress. Learn extra

Gross sales of foldable telephones goal to outpace gross sales of its earlier flagship smartphone, the Galaxy Notice, within the second half. It’s anticipated to unveil the newest foldable gadgets on August 10.

However outdoors the manufacturing facility, dozens of staff interviewed by Reuters virtually all mentioned the work was not good.

Thuong and her pals, who’ve labored at Samsung for about 5 years, mentioned they’d by no means seen deeper manufacturing cuts.

“After all there’s a off-season yearly, usually between June and July, however low means no extra time (further time), not a break in working days like that,” Thong mentioned.

She mentioned managers informed staff that staff’ shares had been excessive and there weren’t many new orders.

Analysis agency Gartner expects world smartphone shipments to fall 6% this 12 months as a result of client spending cuts and a pointy drop in gross sales in China.

Samsung City

Samsung is the biggest international investor and exporter in Vietnam, with six factories throughout the nation, from the northern industrial hubs of Thai Nguyen and Bac Ninh the place most telephones and spare components are manufactured, to the Ho Chi Minh Metropolis manufacturing facility that makes fridges and washing machines.

The South Korean firm pumped $18 billion into Vietnam, boosting the nation’s financial progress. Samsung alone contributes a fifth of Vietnam’s complete exports.

Its arrival almost a decade in the past in Tay Nguyen, about 65 kilometers (40 miles) from the capital Hanoi, has reworked the world from a quiet agricultural space right into a sprawling industrial hub that now additionally manufactures telephones for Chinese language manufacturers together with Xiaomi Corp (1810.HK). ).

Beneficiant advantages, together with backed or free meals and lodging, have drawn tens of hundreds of younger staff to the world, however lowered working hours have left many feeling stale.

“My wage was lower in half final month as a result of I solely labored 4 days and spent the remaining week doing nothing,” mentioned employee Nguyen Thi Tuy.

Job cuts are nonetheless on the minds of some staff however to this point no job cuts have been introduced.

“I do not suppose there might be job cuts, just a few working hours to match the present world state of affairs,” mentioned one of many staff, who declined to be named as a result of she didn’t wish to danger her position as a group chief.

“I hope the present lower won’t final lengthy and we are going to quickly return to its regular tempo.”

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Further reporting by Khanh Fu in Hanoi and Joyce Lee in Seoul; Enhancing by Myung Kim and Stephen Coates

Our Requirements: Thomson Reuters Belief Ideas.