Samsung could drop smartphone production into low gear ahead of recession rut

Workers are clocking fewer hours at Samsung’s Vietnam plant

The financial evidence of post-pandemic spending spree seems to be dwindling as market analysts continue to forecast a worldwide recession. Although the makers of the best Android smartphones are affected by consumer behavior changes, Samsung seemingly refuses to acknowledge the effects on its product range and production plans. However, a recent report based on details from insiders suggests dismal sales have forced the brand to quietly slash production ahead of an economic slowdown.

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Although Samsung previously expected unwavering smartphone sales in H2 2022, an exclusive Reuters report (via SamMobile) claims a different story at the company’s two plants in Vietnam. Together, they produce half the company’s phones annually, with the Thai Nguyen location churning out 100 million devices a year on its own. However, interactions with several plant workers revealed that some production lines are running just three or four days a week instead of the usual six, while working overtime is out of the question.

If workers are to be believed, Samsung’s business could be slowing down. However, Reuters speculates the company could be offsetting the production shortfall with help from facilities in India and South Korea. The brand reportedly has no plans to ease annual production targets in Vietnam, though.

Workers in the Vietnam plant seem concerned about job and pay cuts too. Various big tech brands such as Google and Meta have slowed hiring, but others like Microsoft and Netflix have slashed jobs, mostly blaming them on reduced consumer spending and the looming recession.

To some, the change in pace could be interpreted as Samsung’s preparation for tighter customer budgets for low and mid-range products. Its recently-released Q2 report shows 12% profits, but following reports of budget-model stockpiling, the company could focus on high-end devices such as the Galaxy S-series and upcoming models such as the Z Fold 4 and Flip 4. This move would help the company lock horns with Apple, retain market share until the recession blows over, and maintain handsome profit margins.

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