According to official data, Vietnam’s smartphone production and exports fell in November in the run-up to the Christmas sales season, a new sign that the country’s largest manufacturer, Samsung Electronics, is adapting to dwindling global demand.
For years, the South Korean electronics giant has produced roughly half of its smartphones in Vietnam, accounting for nearly a fifth of the country’s total exports.
The drop in output is consistent with reports from industry and government sources, as well as Samsung employees, that the company recently reduced smartphone production in Vietnam for the second time this year.
It is unclear whether the cuts in Vietnam represent a general decrease in Samsung production or a shift to other manufacturing locations.
Samsung, which has spent over US$18 billion in six facilities in Vietnam, at least two of which are focused on smartphones, did not reply quickly to a request for comment.
According to the General Statistics Office (GSO), the Southeast Asian country, a regional manufacturing powerhouse, reported a 9.3 percent decrease in smartphone output to 20.6 million devices in November from the previous year.
Smartphone output declined 6.1% in the first 11 months of the year. According to the GSO, the value of Vietnam’s smartphone exports declined 1% month on month and 0.7% year on year in November.
According to GSO data, the overall category of consumer electronics manufacturing fell nearly 20% year on year in November, with monthly output falling for the third month in a row.
The majority of smartphones manufactured in the country are bound for Western markets, with manufacturing often increasing in the weeks leading up to Christmas. However, corporations are limiting production due to anticipation of decreased consumer demand this year.
If demand remains strong, however, the production cuts could exacerbate inflation in Europe and other importing regions.
SAMSUNG CUTS
An industry source familiar with the situation said earlier this month that Samsung “has cut production significantly” again after scaling back its activities in Vietnam in the first half of the year due to the COVID-19 pandemic.
A Vietnam government source confirmed that Samsung cut production in the country twice this year, with the most recent cut likely limiting Vietnam’s contribution to the company’s global smartphone output to 40%, down from 50% in the past.
Three company employees in Vietnam confirmed the layoffs, with one noting that, unlike previous years, workers were allowed to take seasonal leave despite the approaching Christmas.
As a result of the global slowdown, the country’s overall exports fell 8.4% year on year in November to US$29.18 billion, according to the GSO.
Imports fell by 7.3%, implying that further production cuts are possible because components and materials used in exported products are frequently imported for assembly in Vietnam.
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