Samsung has problems: sales are falling, warehouses are overflowing, and a large factory is cutting back on smartphone production

Reuters writes that Samsung is forced to reduce production due to the global decline in demand for gadgets.

What does this mean?

Journalists spoke to employees at Samsung's factory in Vietnam, where, according to the Vietnamese government, the world's largest smartphone maker produces half of its usual amount of phones. And that factory has already felt the drop in sales. So, according to employees, they have switched to a three- or four-day work week, and there is no overtime work either. And this is despite the fact that even last year, at the height of the COVID-19 pandemic, production activity was much higher.

Several workers who have worked at the plant for about five years said they have never seen deeper cuts in production. "Of course there is a low season every year, often between June and July, but low season means no overtime work, not such cuts in hours," notes Pham Thi Thuong, a 28-year-old factory worker. "Last month my salary was cut in half because I only worked four days and did nothing the rest of the week," added another worker, Nguyen Thi Tuoi.

Some workers are thinking about job cuts, but it has not yet been announced. "I don't think there will be job cuts, just a reduction in working hours according to the current global situation," said one worker, who declined to give her name.

On top of that, employees said, warehouses are full of electronics inventory. America's largest warehouse market is overflowing, and major U.S. retailers such as Best Buy (BBY.N) and Target Corp (TGT.N) are warning of slowing sales.

At the same time, Samsung itself is full of optimism: The company said in its earnings report last week that supply disruptions have largely been resolved and that demand will either remain flat or even rise by single figures.

Source: Reuters