Vietnam reports supply chain issues from virus, says may hit Samsung output

HANOI (Reuters) – 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 told Reuters on Friday.

“Car, electronics and phone manufacturers are experiencing difficulty in acquiring supplies and materials due to disruptions from the virus,” the ministry said in an emailed statement.

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

Vietnam on 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 ministry 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 ministry said.

Samsung said it was “making our best effort to minimize impact on our operations”.

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

“If the epidemic is not contained in the next 1-1.5 months, we will run out of inventory. Domestic TV’s and phone’s output will sharply decline,” said the trade ministry, citing a report by the Vietnam Electronics Business Association.

The government said it would stick to this year’s economic growth target of 6.8% 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 had recovered, while 28 suspected cases were being quarantined in hospital.

(This story corrects attribution of comment in paragraph 6 to ministry)