It is Better Here but Not There…
COVID-19 has been devastating to the global economy and has put pressure on economies large and small. With the implementation of a US vaccine plan, the impact of the virus is lessening, but in other countries that were not as fortunate to be able to vaccinate a large percentage of the population or are now facing mutated strains, the impact is quite severe. In particular, Vietnam is facing such challenges, and as the country has become a hub for CE companies, the effects are presenting challenges to those companies that have moved facilities out of China over the last few years.
On May 29, the county’s Minister of Health confirmed that a new variant of COVID-19 had been identified in the country, mixing strains from India and the UK, and is more easily spread through the air. On May 31, Ho Chi Min City instituted social distancing and other than in hospitals, schools, and factories, no more than 5 people are allowed to gather. Four industrial parks in Bac Giang Province have been temporarily closed, where three Foxconn (2354.TT) factories that produced for Apple (AAPL) were located. With a two week shutdown, most local analysts feel that production can be made up, however a longer shutdown could affect Apple’s AirPod Max supply chain.
Samsung has the largest investment in Vietnam and has seen part of its plant in Bac Giang City closed since 40 employees were diagnosed with COVID-19 on the 25th, its largest smartphone assembly operation, and is also facing issues in India, where the new outbreak is worse. Foxconn is also suffering issues in India where (unverified) production of the iPhone 12 has been reduced by 50% and Chinese brands Oppo (pvt) and Vivo (pvt) are also seeing OEM production issues in India. While other countries like Malaysia are also facing new lockdowns, the effects will take some time to trickle through the CE supply chain once again and while Japan used to be the global IC capital of the world, Malaysia is now the leader in IC exports and with over 50 large semiconductor companies located there, and the government only allowing a small percentage of workers to maintain factory operations, the next two to three weeks will be key toward understanding whether semiconductor shortages will increase. Its nice to be able to walk around outside without a mask in the US, but much of the rest of the world is not so lucky.
On May 29, the county’s Minister of Health confirmed that a new variant of COVID-19 had been identified in the country, mixing strains from India and the UK, and is more easily spread through the air. On May 31, Ho Chi Min City instituted social distancing and other than in hospitals, schools, and factories, no more than 5 people are allowed to gather. Four industrial parks in Bac Giang Province have been temporarily closed, where three Foxconn (2354.TT) factories that produced for Apple (AAPL) were located. With a two week shutdown, most local analysts feel that production can be made up, however a longer shutdown could affect Apple’s AirPod Max supply chain.
Samsung has the largest investment in Vietnam and has seen part of its plant in Bac Giang City closed since 40 employees were diagnosed with COVID-19 on the 25th, its largest smartphone assembly operation, and is also facing issues in India, where the new outbreak is worse. Foxconn is also suffering issues in India where (unverified) production of the iPhone 12 has been reduced by 50% and Chinese brands Oppo (pvt) and Vivo (pvt) are also seeing OEM production issues in India. While other countries like Malaysia are also facing new lockdowns, the effects will take some time to trickle through the CE supply chain once again and while Japan used to be the global IC capital of the world, Malaysia is now the leader in IC exports and with over 50 large semiconductor companies located there, and the government only allowing a small percentage of workers to maintain factory operations, the next two to three weeks will be key toward understanding whether semiconductor shortages will increase. Its nice to be able to walk around outside without a mask in the US, but much of the rest of the world is not so lucky.
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