Samsung already stocks tens to millions of smartphones at its dealers and warehouses. However, the lower demand means that sales are slower. For more than a month, the company has reduced production at its main locations. The portal VietnamNet reported by Samsung that it has drastically reduced the production volume at its Vietnamese factories. However, this has been happening since June and it is unlikely to change in the near future. These two huge factories in Vietnam produce only half of their normal production.
Overproduction can cause losses
From early June, production was running five days per week. However, production has been reduced to three days per week at Samsung’s Vietnam factories for more than four months. The group is trying to prevent an increase in inventories as well as losses due to falling sales prices. According to the report, approximately 50 million smartphones are in stock at Samsung’s distributors and retailers. Although it is not unusual for some equipment to be stored, this is usually only about ten per cent of production.
However, at the moment, the number of equipment stored is almost double. According to industry sources Samsung has already reduced its production volume for 2022. It is now estimated that less than 270 million units have been sold, compared to the 330 million units previously thought. This is a negative development for Vietnam. Many jobs are being lost, and the communist country’s growth is being delayed.