Weak global smartphone sales push Samsung to cut production

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Warehouses in California are filling up with clothing, electronics, furniture, and other goods from across the Pacific Ocean. Samsung recently said that it expects flat smartphone sales or single-digit growth at best for the second half of this year. The Samsung factory in Thai Nguyen, Vietnam churns out 100 million phones a year. Two factories in that country are responsible for half of Sammy’s annual smartphone production. According to several workers at the Thai Nguyen factory who spoke with Reuters, business is not good. Last year at this time, business was booming. But now, these employees say that they have never seen smartphone production drop this low with some assembly lines running for just three days a week, down 50% from the six days a week that they usually run. Other lines are operating four days a week and no overtime is allowed.

If you use the links on this page to make a purchase, we might receive a commission. Samsung reduces output due to a global decline in smartphone sales. According to Reuters, the recent decline in global smartphone sales has caused a dramatic drop in handset production at Samsung’s sizable smartphone manufacturing facility in Vietnam. The company now has a surplus of inventory that it will need to sell, maybe by lowering prices, as a result of the slowdown, which is a part of a global reduction in consumer spending. According to the research, prominent American retailers like Best Buy and Target anticipate that sales will continue to sputter as domestic shoppers begin to feel the effects of a faltering economy.

Highlights

  • This news comes just six days before Samsung is scheduled to hold its next Unpacked event during which it is expected to introduce the Samsung Galaxy Z Fold 4 and the Samsung Galaxy Z Flip 4; the former opens like a book to turn from a small smartphone into a tablet. The latter is a small device that easily fits into a pocket and flips open to become a 6.7-inch phone with a tall and thin display. Reserve your place in line when it comes time to pre-order the Galaxy Z Fold 4 and Galaxy Z Flip 4
    Samsung Galaxy Z Fold 4

  • In its report, Reuters did note that it is possible that some of Samsung’s smartphone production could have been moved to other plants in India and/or South Korea. Nonetheless, Samsung has yet to make any job cuts in Vietnam even though other tech firms have started announcing layoffs. Those companies include software and hardware producer Microsoft, retailer Best Buy (heavy on tech sales), social media apps TikTok and Twitter, streaming content provider Netflix, online broker Robinhood, and audio chat app Clubhouse.

Higher inflation in the U.S. is also leaving Americans with less money to spend on expensive consumer electronic devices including smartphones. There are still enthusiasts who are able to include the purchase of a new phone in their budget. Others might have to hold on to their current phone or downgrade from a top-of-the-line model to a more affordable model. Interestingly, Samsung’s Galaxy A line might perform well under these conditions. The mid-range Galaxy A phones have viable cameras, large screens, big batteries, and smaller price tags.

The U.S. Gross Domestic Product (GDP), which measures the value of goods and services produced in the states and purchased by the end user, has declined for two consecutive quarters which usually is a sign of an impending recession. Add to that the 150-point hike in short-term interest rates orchestrated by the Federal Reserve Board to slow inflation, and we could see even more declines in smartphone production ahead.

 

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