Samsung Shifts Production to Vietnam Because of Coronavirus Outbreak

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Samsung has reportedly shifted manufacturing operations and production to its Vietnam plant from its South Korean plant in Gumi. Samsung reported six cases of coronavirus from its Gumi line last week. The company had to shut down its Gumi manufacturing line for a few days even last week as the coronavirus cases soared.

The expectation from Samsung is that its Vietnam factory will pick up the slack and compensate for the shut down of operations in the Korean plant. Samsung's Gumi manufacturing plant is used for manufacturing premium and high-end smartphones like the Samsung Galaxy Note 10+, Samsung Galaxy S20 and Samsung Galaxy Z Flip for the domestic market in Korea.

The outbreak of the novel coronavirus, or COVID-19, has severely impacted South Korea. The country has reported more than 6500 cases till date.

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The World Heatlh Organization (WHO) has acknowledged that the coronavirus epidemic is a threat to every country. The virus has spread like wildfire across several countries in the last three months. It was first detected in Wuhan in the Hubei province of China last year.

The virus has since continued its spread across several countries, resulting in economic impacts and disruption of business. Google's annual developer event – Google I/O 2020 – has also been cancelled due to the coronavirus outbreak.

Market experts are now expecting global smartphone shipments to contract in the first half of 2020. The impact will be due to shortages in the supply of manufacturing components majorly from China.

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Samsung shifts production to Vietnam temporarily, other OEMs impacted by Coronavirus too

Samsung expects the manufacturing and production activities at the Gumi line in Korea to return to normal once the outbreak abates.

From the perspective of smartphone manufacturers, the worst-hit appears to be Apple and Huawei at the moment. Both, Apple & Huawei, have manufacturing lines  concentrated in China which has suffered the worst, even outside the epicenter of Wuhan and the Hubei province.

As per Counterpoint Research, China has felt the maximum impact on supply and demand being the epicenter. However, the impact of this outbreak is also evident in other countries as consumers have begun moderating their economic activity.

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Strategy Analytics has forecasted a decline of up to 10 percent in the volume of smartphone shipment due to the coronavirus COVID-19 outbreak. US-based Counterpoint Research also backs up this contraction claim.

As per Counterpoint Research, global smartphone shipments can contract as much as 5 percent in the first quarter itself. Several countries have placed supply and import restrictions from China and other COVID-19 affected countries.