Samsung’s Vietnam problem is about to get a whole lot worse

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Vietnam’s former capital Ho Chi Minh city is all set to enter a new lockdown due to rising COVID-19 cases in the region. The new measures will disallow citizens from moving about freely and require commercial establishments to operate with limited staff. As a result, Samsung’s manufacturing facilities in the region are slated to take a hit.

Located at Saigon Hi-Tech Park, Samsung Electronics’ factory produces smart TVs and other household appliances. It employs over 7,000 employees and the products are shipped to a wide variety of markets, including the USA, Europe and Southeast Asia.

Samsung’s plant in Ho Chi Minh will be hit hard

Until now, Samsung had skirted around the restrictions by having workers sleep in the factory or at locations nearby. It is also worth noting that the plant had been operating at 30-40% capacity due to the aforementioned restrictions.

This drop in productivity couldn’t come at a worse time, as the festive season will be upon us soon. Samsung will incur losses worth 17 billion won ($145 million)every day the plant remains shut.

However, we can expect Samsung to negotiate some workaround with the Vietnamese authorities. In the past, Samsung Display employees got special access to enter the country amid tight lockdown restrictions. For the most part, Samsung-branded devices have been largely exempt immune to the global semiconductor shortage, but the disruption in its Vietnam facilities could change that.

Samsung’s smartphone manufacturing facilities are unaffected at the moment, as they are located elsewhere. It should ensure a steady supply of smartphones for the foreseeable future. Besides, there are additional facilities in countries like India which can help pick up the slack should the plant in Vietnam face any difficulties.

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