Samsung may need to adjust production amid US tariffs
Samsung may need to reconsider its strategy around the U.S. tariffs that could disrupt its supply chain and make it difficult for Galaxy smartphones production in Vietnam.
Vietnam has remained as a production hub for the South Korean tech maker for more than a decade. The company has poured billions of dollars into the Asian market to mass production.
As of last year, Samsung’s cumulative investment in Vietnam is expected to total $22.4 billion, and it operates six manufacturing plants including an R&D center. It accounts for a significant share of Vietnam’s overall exports to other countries.
facilities in Vietnam are known for their mobile production, accounting for half of its yearly export. These exports then spread around the world, including the U.S. The reason for Samsung’s expansion in Vietnam is affordable and skilled labor resources.
But recent 46% tariffs from the U.S. has crumbled Vietnamese exports and brought a fear into Samsung’s production capacity. The Korean phone company is also the second-largest smartphone seller in the US, which is another major concern to its market competence.
Apple, which largely produces products in China, is in even bigger danger due to larger tariffs of 146%.
For now, the Trump administration has paused these tariffs for the next 90-days and exempted smartphones as well as other electronics from import duties. Vietnam, on the other hand, has chosen to negotiate with the U.S. to bring down the duties from both sides.
A top official from Samsung says that the company is closely monitoring U.S. tariffs and will take next steps based on future developments.
Compared to Vietnam, Samsung also operates manufacturing facilities in Korea and India. Compared to the home ground, India accounts around 20 percent of overall Galaxy devices. If the U.S. and Vietnam failed to come on terms, the company might have to increase its production at the Indian sites due to lower tariff duties of 26%.
This scenario doesn’t seem immediate, but the duties would make Samsung do the unthinkable. For now, the Korean firm can continue to export devices from Vietnam at the same duties, but that is only temporary.
