Because the inventories in one of Samsung’s largest factories in Vietnam are bulging, the Korean manufacturer is unceremoniously scaling back smartphone production. Theoretically, around 100 million smartphones could be manufactured there per year, but employees are now not even working the entire week.
Samsung reduces smartphone production
The global smartphone market plummeted in the second quarter of 2022. Demand fell by nearly nine percent, which naturally led to inventories being full. According to analysis by IDC, Samsung (along with Apple) was still the only manufacturer to see growth.
Nevertheless, sales are far behind expectations, which ensures that one of the manufacturer’s largest factories in Thai Nguyen, Vietnam is now significantly downsizing production. That’s according to news magazine Reuters, citing employees.
Theoretically, the factory would have capacity to produce about 100 million smartphones a year, but warehouses are full. As a result, employees now work only three or four days a week, depending on the production line. Six-day weeks are the norm there. Even overtime is said to have been cut.
“Manufacturing was higher even during COVID-19”
Even despite COVID-19 measures exactly a year ago, production within the factory was higher than at the current time, Pham Thi Thuong reveals to Reuters. This was despite the fact that Samsung had launched numerous new devices this year.
Officials say they have not scaled down production targets at Samsung’s Vietnam factory. It is also unclear whether core production will be moved to other factories, such as those in India or South Korea.
Apple is also increasingly shifting production to India and Southeast Asia, as it first told suppliers in May 2022. Still, Samsung is relatively optimistic about smartphone demand for the second half of 2022, he said. Thus, in an investor interview, the company assumed that demand would remain the same or at least increase in the single-digit range.
The two new foldable smartphones, which will presumably be available in August after the unveiling next week, are supposed to be the main reason for this. Traditionally, that should be it for this year in terms of new products in Samsung’s smartphone segment.
Not only smartphones have to struggle with low demand. After the booming sales figures during the Corona pandemic the sales of PCs and notebooks also dropped drastically in 2022. In the second quarter of 2022 alone, around 13 million fewer stationary PCs and notebooks were sold than in the same quarter of 2021.