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

HANOI (Reuters) – Vietnam’s manufacturing sector is suffering supply chain issues caused by the coronavirus epidemic, which may lead to a delay in production of Samsung Electronics’ new phones, the Ministry of Industry and Trade told Reuters on Friday.

Container trucks are seen while waiting for cross the border at Huu Nghi border gate connecting with China, in Lang Son province, Vietnam February 20, 2020. REUTERS/Kham

“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 added.

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 added. 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,” it said.

Although the ministry hasn’t recorded any plants being shut down because of the virus, car and electronics manufacturers’ biggest challenges 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 Vietnam Electronics Business Association’s report.

The Vietnamese 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 have now been recovered, while 28 suspected cases are being quarantined at local hospitals.

Reporting by Phuong Nguyen and Khanh Vu; Editing by Kim Coghill

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