Coronavirus: Samsung may be hit by Vietnam supply chain disruptions

HANOI • Vietnam's manufacturing sector is suffering supply chain problems caused by the coronavirus epidemic, which may delay production of Samsung Electronics' new phones, the Ministry of Industry and Trade has said.

"Car, electronics and phone manufacturers are experiencing difficulty in acquiring supplies and materials due to disruptions from the virus," the ministry's Industry Agency said in an e-mailed statement to Reuters on Friday.

"Vietnam relies much on China for materials and equipment, which makes the country become vulnerable when such outbreak happens," it said.

Vietnam last Thursday eased some health-related restrictions on cross-border trade to prop up economic activity, but some strict measures are still in place.

Samsung, Vietnam's largest single foreign investor, is an example, the agency said. The epidemic would have an impact on its production of two new phone models as most of the components are sourced from China.

"Samsung is considering using sea or air transport to import needed components but it would lift up the cost and would hardly meet the production schedule and demand," the agency said.

Samsung said it was "making our best effort to minimise impact on our operations".

Although the ministry has not reported any plants being shut down because of the virus, the biggest problem facing car and electronics manufacturers is securing alternative materials and goods, along with inventory management.

"If the epidemic is not contained in the next one to 11/2 months, we will be in trouble. Domestic TVs' and phones' output will sharply decline," said the Industry Agency, citing a report by the Vietnam Electronics Business Association.

The government said it will stick to this year's economic growth target of 6.8 per cent and take steps to ease the impact of the outbreak.

The Ministry of Health said on Friday that 15 out of 16 confirmed coronavirus cases in the country have recovered, while 28 suspected cases were being quarantined in hospital.

The coronavirus originated in China before spreading to some 26 countries and territories outside mainland China.

REUTERS

A version of this article appeared in the print edition of The Straits Times on February 24, 2020, with the headline 'Samsung may be hit by Viet supply chain disruptions'. Subscribe