Samsung and LG Factories Concentrated... Korean Companies in Emergency Due to Vietnam Movement Restrictions

Moves to Strengthen Local Government Lockdowns Amid Spread of 'Corona Variants'

Samsung Bac Ninh Factory in Vietnam

[Asia Economy Reporters Kim Heung-soon and Cho Hyun-ui] A new COVID-19 variant virus, combining the Indian and UK variants, has emerged in Vietnam, causing a surge in confirmed cases and impacting the supply chains of global information technology (IT) companies. Domestic companies such as Samsung Electronics and LG Electronics, which operate production lines locally, are increasingly anxious as local governments impose movement restrictions one after another.

According to local media on the 31st, Bac Ninh Province in Vietnam, where about half of Samsung Electronics' annual smartphone shipments are produced, will implement a measure from the 2nd of next month to suspend commuting for workers within the region. The intention is to minimize face-to-face contact during movement to block infections.

Bac Ninh Province is home not only to Samsung Electronics' mobile phone factory but also to Samsung Display's panel factory. The number of employees is approximately 20,000 and 25,000 respectively. A Samsung official said on the day, "The Vietnam subsidiary is strictly adhering to Bac Ninh Province government's quarantine guidelines to prevent the spread within the region," adding, "We are seeking solutions for this."

To reduce work disruption caused by movement restrictions on employees, companies must independently arrange and provide accommodations. The plan is to make maximum use of dormitories within the factories, temporary spaces, and secure nearby lodging facilities to house employees. However, there is concern that securing temporary housing for tens of thousands, including local partner companies, immediately is not easy, raising worries about potential disruptions in operations and supply.

In northern Vietnam, global production bases of major IT companies such as Samsung Electronics, LG Electronics, and Apple are concentrated. LG Electronics has also decided to support accommodation costs so that employees living in restricted movement areas can commute near the factory. LG Electronics operates production lines for home appliances, mobile devices, and automotive parts in Haiphong, where many residents of Bac Ninh Province are also identified.

Samsung Electronics' Ho Chi Minh City subsidiary, which produces TVs and home appliances, is not as urgent as Bac Ninh Province but is closely monitoring the provincial government's guidelines while maintaining normal factory operations.

Vietnam, once regarded as a model country for quarantine in the early stages of the COVID-19 crisis, is now experiencing a rapid spread due to a variant virus that is more transmissible and replicates faster than the existing virus. More than half of the cumulative 6,856 confirmed cases have occurred in the past month. Bac Ninh Province was hit hard, with nearly 700 confirmed cases during this period.

The Vietnamese government announced strengthened quarantine measures in Ho Chi Minh City the day after declaring the new variant virus "very dangerous." These measures, effective from that day for fifteen days, include prohibiting gatherings of more than 10 people, minimizing outings, and maintaining at least 6 feet (1.8 meters) of distance. Some local governments with severe outbreaks have already implemented their own measures such as travel bans and curfews.