Nikkei reported on the 11th that Samsung Electronics’ sluggish smartphone business is negatively affecting the Vietnamese economy. As Vietnam is highly dependent on Samsung Electronics, the company’s performance and investment decisions are expected to have a significant impact on the Vietnamese economy in the future.
Nikkei said on the same day, “The sluggish business of Samsung Electronics, the world’s largest company in the smartphone market, and the decline in investment by Korean companies are casting a shadow on the Vietnamese economy.”
According to the Korea International Trade Association, direct investment from Korea to Vietnam from January to May this year was only USD 670 million, down 67.6% from the same period last year.
In particular, Vietnam is a major manufacturing and export base that produces about half of Samsung smartphones, and it is pointed out that production has been decreasing significantly recently.
Hong Kong research firm Counterpoint analyzed in a report last month that Samsung was responsible for a 23.1% drop in shipments of Vietnamese smartphones from January to March from the same period last year. Samsung’s smartphone shipments, which account for the majority of Vietnamese mobile phone shipments, fell 22.5 percent.
Sales of Samsung Electronics’ Vietnam (SEV) corporation fell 27.1% year-on-year to 4.3 trillion won and net profit fell 10.4% to 447.4 billion won in the April-June period.
Nikkei quoted an industry official familiar with the SEV news as saying that the Vietnamese prime minister asked to build a semiconductor factory, but Samsung refused, which was attributed to the sluggish smartphone business.
Vietnam aims to improve the value chain from procuring raw materials to manufacturing and shipping using Samsung’s investment. However, Vietnam is diagnosed that the level of technology and infrastructure needed in the industry is not following.
In a related development, Vietnamese Prime Minister Pam Min-jin asked in July that “Samsung would like to train and train Vietnamese managers and leaders so that Vietnamese people can operate factories there.”
Meanwhile, Samsung Electronics operates four production corporations, six local factories, and one sales corporation and one R&D center each in Vietnam.
