By Khanh Vu and Phuong Nguyen
HANOI (Reuters) – Vietnam’s smartphone production and exports fell in November ahead of the Christmas sales season, according to official data, another sign that the country’s largest manufacturer, Samsung Electronics, is adjusting to declining global demand.
The South Korean electronics giant has been manufacturing about half of its smartphones in Vietnam for years, accounting for nearly a fifth of the country’s total exports.
The drop in production is in line with what industry and government sources, as well as Samsung employees, told Reuters that the company recently halted its smartphone production in Vietnam for the second time this year.
It is unclear whether the cuts in Vietnam reflect Samsung’s overall decline in production or a shift to other manufacturing countries.
Samsung, which has invested about $18 billion in six factories in Vietnam, at least two of which are focused on smartphones, declined to comment.
The Southeast Asian country, a regional manufacturing powerhouse, reported a 9.3% drop in smartphone output to 20.6 million units in November from a year earlier, the General Statistics Office (GSO) said.
Smartphone output fell 6.1% in the first 11 months of the year. The GSO also said that the value of Vietnam’s smartphone exports fell 1% month-on-month in November and 0.7% from a year earlier.
The broader category of consumer electronics production fell nearly 20% year-on-year in November, GSO data showed, with monthly production falling for a third consecutive month.
Most of the smartphones produced in the country are destined for Western markets, with production usually increasing in the weeks leading up to Christmas. But the expectation of lower consumer demand this year is prompting companies to limit production.
However, if demand continues, the production cuts could exacerbate inflation in Europe and other importing regions.
Earlier this month, an industry source familiar with the matter said that Samsung “has again significantly cut production” after scaling back its operations in Vietnam in the first half of the year amid the coronavirus pandemic.
A Vietnamese government source confirmed that Samsung has cut production in the country twice this year, with the latest move likely to limit Vietnam’s contribution to the company’s global smartphone production to 40% instead of its usual share. of 50%.
Three of the company’s employees in Vietnam confirmed the cuts, with one noting that employees were allowed to take seasonal leave despite the approaching Christmas, unlike in previous years.
As the country faces headwinds from a global slowdown, total exports fell 8.4% year-on-year in November to $29.18 billion, according to the GSO.
Imports also fell 7.3%, pointing to possible further production cuts as components and materials used for exported products are often imported for assembly in Vietnam.
(Reporting by Khanh Vu and Phuong Nguyen; Additional reporting by Joyce Lee in Seoul; Editing by Francesco Guarascio and Arun Koyyur)