Vietnam: Samsung flies phone parts to Vietnam to deal with supply chain disruptions

  • Samsung has begun flying electronic components for its latest Galaxy phones from China to its factories in Vietnam as it grapples with sweeping supply chain disruptions caused by coronavirus.
  • “The Vietnamese government is restricting the daily transport volume from China to Vietnam through land routes, but we’re coping with it by increasing parts supplies from China via planes and shipping,” said a person familiar with the situation.
  • Samsung, the world’s biggest smartphone maker, produces nearly two-thirds of its phones, including its latest range, at plants in Vietnam’s Bac Ninh and Thai Nguyen provinces.
  • But the coronavirus crisis has left Vietnam’s manufacturers, both local and foreign-owned, vulnerable in areas from electronics to textiles and footwear because many have supply chains that rely on China.
  • As factories in Vietnam resumed operations after the Tet Lunar New Year holiday, companies found the border with China closed or restricted for trade in both directions. Vietnam and China have both taken steps since then to ease the flow of goods but Hanoi has imposed a quarantine on truck drivers returning from China, making some reluctant to drive there for fear of losing wages.
  • LG Electronics, another South Korean technology manufacturer which produces mostly low to mid-end smartphones in Vietnam, is facing similar supply disruptions. A spokesperson insisted the company has not yet faced inventory problems in Vietnam but is “considering various options” in case the crisis is prolonged.
  • Analysts warned, however, that because the companies source about 30% of phone components from China, they could face serious problems with supplies of China-made cables, sockets, plugs as well as components for cameras.

External Link : https://www.ft.com/content/0dc1c598-4f06-11ea-95a0-43d18ec715f5

17-Feb-2020


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