Samsung’s factory in Vietnam is the largest production base, accounting for more than 60% of Samsung’s global smartphone output. Recently, Samsung adjusted the number of working days of smartphone manufacturing workers in Vietnam from 5 days to 3 days a week.”This means that the company’s plan to lower the production of targeted smartphones has begun”, commented ETNews.
Samsung also sent information about the adjustment of the 3-day working week at the factory in Vietnam to major supply partners. The number of working days can be 3 or 4, depending on the capacity of the product production line. Currently, Samsung applies many measures to reduce the number of working days, such as encouraging vacations for workers at its factory in Vietnam.
Samsung’s component suppliers in Vietnam also reduced the number of production days for workers. The number of components has been reduced, and the production capacity of the line has also been adjusted. Some partner companies are even warning of a drop in earnings in the second quarter of 2022.
According to ETNews, the reduction of workers’ working days at factories in Vietnam depends on Samsung’s adjustment to the target number of smartphone shipments.
At the beginning of the year, Samsung expected total smartphone shipments to increase to 334 million units thanks to the economic recovery after the pandemic and the disruption of the semiconductor supply chain. However, the Korean corporation cut this target recently, to only about 270-280 million units.
The cause is said to be the influence of the Russia-Ukraine conflict at the beginning of the year and the “false advertising” incident, which aims to reduce performance via GOS (game optimization service) of the Galaxy S22 series.
Experts predict production reductions will also take place in India, which is Samsung’s second-largest smartphone production base, as well as Brazil. The factory in India produces 20-30% of total Samsung smartphones and Brazli is 10-15%.
It is unusual for Samsung to reduce the number of working days to 3 days a week. Analysts say this is a “confusing” situation, especially when the company’s 4th generation Galaxy Fold and Flip phones are due to be launched in August. A Samsung official said: “No. The working day of factory workers is always flexibly adjusted based on market changes”.
Analysts say the smartphone crisis is spreading within Samsung. To prevent and deal with risks, the Group conducts an assessment of the business environment, internally. “There is a feeling of a great crisis looming”, commented ETNews.
In March, Chairman of Taiwan Semiconductor Manufacturing Co (TSMC) Mark Liu said that demand for consumer electronics is showing signs of slowing down amid political uncertainty and COVID-related shutdowns. 19 in China. TSMC is the world’s largest contract chipmaker, arguably the “gauge” of global electronics demand.
Mr. Mark Liu said that a recession is coming to sectors such as smartphones, PCs and TVs, especially in China, the largest consumption market.
Before Samsung’s move, Apple also reduced orders for the iPhone SE and the new generation of iPhone 13. Therefore, the signs of slowing growth of the world smartphone market are even clearer.